Alibaba Options Volume More Than Triples After China Vows to Bolster Growth

Luzi Ann Santos joined discussion · Dec 10, 2024 03:32

$Alibaba (BABA.US)$'s options volume more than tripled after reports that China's politburo, the Asian nation's most important decision-making body, vowed to use fiscal and monetary policy to bolster economic growth.

More than 561,000 Alibaba call and put options changed hands across 19 expiration dates that stretch through Jan. 15, 2027, as of 2:14 p.m. in New York Monday. That's more than triple the previous session's 168,289 contracts and more than double the 20-day average of 207,305, data compiled by Bloomberg show.

Source: moomoo mobile app

(To see Alibaba's options chain, click here. For the U.S. options market page, click here.)

Alibaba's American depositary shares jumped as much as 9.5% to $94.12, before paring the advance to $93.59. The rally boosted the probability that call options that give the holders the right to buy the ADRs at $100 would be in the money before they expire.

That helped make the $100 call options expiring next week become the most active Alibaba options, with volume jumping more than 10-fold to 26,420. The second most active was the $95 call options maturing this week, followed by another $100 call options due in mid-January.

Alibaba's increasing appeal turned the company's ADRs as the seventh most popular stock options, behind $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$, $Palantir (PLTR.US)$, $Apple (AAPL.US)$, $Amazon (AMZN.US)$ and $Advanced Micro Devices (AMD.US)$. (To see the options ranking, click here.)

Morgan Stanley economists described the Politburo's statement as having the "most aggressive stimulus tone in a decade," according to a Bloomberg report. Another report quoted a Bank of New York Mellon strategist as saying the statement had a "positive message regarding household consumption."

Source: moomoo mobile app

There are other things that could be helping boost positive investor sentiment toward Alibaba. Bloomberg Intelligence analysts cited the "sequential lift" in Alibaba's customer management revenue gains in the October-to-December quarter from China's lengthier Singles' Day shopping festival.

"Alibaba could more efficiently monetize its services to Taobao-Tmall (TTG) merchants in fiscal 2H through March and accelerate the growth rate of the unit's customer management revenue (CMR) closer to GMV gains,"
the analysts said in a note Monday, referring to gross merchandise volume. "Evidence of this is likely to emerge in fiscal 3Q with the firm's push to lift merchants' conversion rates during the Singles' Day shopping festival."

Share your thoughts on Alibaba in the comments section. Is the Politburo statement enough to finally sustain the rally for Alibaba and the rest of the Chinese stocks? Please vote below.

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