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%)
2. BUY BABA Feb 16'18 $192.5 CALL = $3.32 (1.82%)