Alibaba – latest service fee charge to add to share price catalyst?

➡️ Yesterday, Alibaba shares listed in Hong Kong gained as much as 5.8% to HKD 77.30 – its most in two months – after news that the company will start charging a basic software service fee of 0.6% on confirmed transactions for vendors on both the Tmall and Taobao platforms. Alibaba shares eventually closed 4.7% higher at HKD 76.55. Its latest move has taken the stock up the top 10 index gainers of the Hang Seng Index (-2.7% as of 29 July) for the month.

➡️ Investors who anticipate volatile moves in Alibaba shares in the short-term may wish to consider using warrants to trade such moves. One of the reasons investors buy and trade warrants is due to the high gearing they provide while costing only a fraction of the underlying index/share price.

➡️ As an example, when Alibaba shares gained 5.8% intraday, Macquarie’s trending call warrant Alibaba MB eCW241104 (ULXW) rose as much as 31% to SGD 0.039 while trending put warrant Alibaba MB ePW241203 (47GW) fell 33.3% to SGD 0.014.