Option Swing Trading in $BABA

With the FXI dropping we were keeping an eye on Alibaba ($BABA) for an opportunity.  On June 27th the stock opened at $193.46 and traded down to it’s 100 day simple moving average.  The last two days the stock sold off below the moving average but rallied above…something we had to be concerned with on this day as well.  To our good luck, the stock proceeded to make lower lows throughout the day and trade down to the 200 day simple moving average that was roughly $4 lower.  At this point, smart trade management says to roll your put options or exit the trade.

Given the trade war news we figured it wise to exit the trade by the end of the day.  One news story or tweet could rally the market and we would be stuck in a pretty volatile stock.

The 100 day sma on the break was $189.22.  We bought the $190 puts with an expiration of June 29th. At the SMA break the 190 puts were trading about $2.20.  At the end of the day these options were bid $5.60 with stock at $185.02.  This would have been a 154% profit if you did not roll.

Some of our subscribers rolled early and some locked in profit early.

Congrats on the trade Dudley P., who reported a profit of 70% on this price break.