As traders delve into the realm of options trading for Alibaba Group Holding Ltd (Symbol: BABA), new opportunities beckon on this June 28th. With a shrewd eye for possibilities, Stock Options Channel has sifted through the BABA options chain, singling out a put and call contract for discerning investors.
Exploring Put Contracts
At a strike price of $72.00, a put contract emerges with a bid of $1.17. By seizing this contract, investors step into a pact where they commit to buying the stock at $72.00, pocketing the premium. Thus, the cost basis of the shares lowers to $70.83 prior to broker commissions. For those eyeing BABA shares, this could dangle a tantalizing alternative to today’s market rate of $79.44.
Given that the $72.00 strike wields a 9% markdown from the prevailing trading price of the stock, there arises a chance that the put contract might end fruitless. Statistics hint at an imposing 78% likelihood of such an outcome. Stock Options Channel will monitor these probabilities meticulously, sketching a visual representation of the fluctuations on our portal.
Visualizing the Scenario
An illustrative graph delineates the twelve-month trading trajectory of Alibaba Group Holding Ltd. The $72.00 strike is artfully highlighted in green within this historical context.
Anatomy of Call Contracts
On the flip side, a call contract at the $89.00 strike beckons with a bid of $1.31. Opting for a ‘covered call’ strategy entails buying BABA shares at the present rate of $79.44 and selling the call contract, committing to offload the stock at $89.00. This maneuver could yield a sumptuous 13.68% return at the June 28th expiry, barring dividends.
While alluring, the covered call comes with a caveat – potential lost gains if BABA shares take flight. Flanked by the riotous hue of red in the trailing twelve-month chart for Alibaba Group Holding Ltd, the $89.00 strike sits conspicuously as a 12% premium to the current stock price.
Calculating the Odds
Amidst the trading dance, the $89.00 strike evokes tantalizing prospects, yet also bears a 71% chance of fizzling out. Stock Options Channel vows to chart the ebb and flow of these odds, providing investors with a compass through the murky waters of volatility. Should the covered call reach a whimpering demise, the premium engenders a 1.65% uplift in returns, or 12.04% when annualized – christened the YieldBoost.
Embalmed with an implied volatility of 47% and 45% for put and call contracts respectively, the actual stride of Alibaba Group Holding Ltd stands at a gallant 35% for the trailing year. For a treasure trove of robust options concepts, the corridors of StockOptionsChannel.com beckon.