HAL9000

BABA - Triple-topping: What to do with the upcoming earnings?

NYSE:BABA   Alibaba Group Holdings Ltd
BABA’s exceptional run seems to be triple-topping. While the long-term trend remains up, the short and mid-term pictures look like they have turned to the downside. The company should announce earnings on Feb 1 before market open and I would wait for this catalyst to go long, just in case any fundamental disappointment should take us lower to confirm the poor, current technical picture. In line with the strategy I proposed on NFLX             (see below), the game consists in buying synthetic upside exposure ahead of earnings . If the stock breaks out, you will be exposed to the upside. If the stock remains range-bound, you will lose a small premium. If the stock disappoints and tanks, you could decide to lose your premium or to sell a put to make your lost premium up.

1. BUY BABA Feb 16'18 $182.5 CALL = $6.90 (3.78%)

OR

2. BUY BABA Feb 16'18 $192.5 CALL = $3.32 (1.82%)
Comment: BABA is re-testing its resistance and yesterday actually closed above 192 in twice average volume. This suggests the stock could be breaking out even ahead of earnings. The calls I recommended 2 days ago have now roughly doubled in value:

1. Feb 16'18 $182.5 CALL = $13.42 --> +94.5%
2. Feb 16'18 $192.5 CALL = $3.32 --> +128%

Keep holding the calls into earnings, if you have purchased them.
Comment: In my previous post, please read the following:

2. Feb 16'18 $192.5 CALL = $7.57 --> +128%

instead of what I wrote which was incorrect.

Thank you.
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