Patient $BABA bulls make major profits

Patient and bullish option traders have more than tripled their money on large upside positions in Alibaba (BABA) today, as the shares make a new all-time-high.

Way back on Oct. 10, 2018, our Unusual Activity Service flagged the purchase of 10,000 January $160 calls for $16.85 with shares at $139.96. Volume was far above the strike’s previous open interest of 2,123 contracts, showing that this was a new position.

Those calls are currently marked for $62.75, more than 3.5 times their purchase price. The stock has risen 59.13% at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a 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 is up 2.17% to $222.72 this morning. The Chinese e-commerce company is the top holding of the KraneShares CSI China Internet ETF (KWEB), which also made a new 52-Week high today.