Upside option positions in Alibaba continued climbing to stratospheric levels after the Chinese company unveiled a new voice-controlled device.
On April 24, Investitute’s tracking systems detected the purchase of 7,500 July $130 calls for $0.91 with shares at $114.74. This was clearly a new position, as open interest in the strike was only 1,743 contracts before the trade occurred.
Those calls ended today’s session trading at $15.25, a gain of nearly 1,600 percent. The stock rose 26.4 percent in the same period, underscoring the kind of leverage that can be obtained through options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
BABA was up 2.75 percent to $144.87 today. The e-commerce company rallied after launching “Tmall Genie” in China, a voice-activated product similar to those made by rival Baidu, Amazon.com, and Apple.