If you’ve been trading in the last two years, chances are you’ve at least followed Alibaba (NYSE:BABA) if not traded in and out of it. The stock has done well so far in 2017. It is up 17.5%, the last leg of which came after it gapped up following a strong earnings beat.
Two days after reporting earnings, BABA moved over $100 for the first time since November. It made hit its most recent high of $104.57 on the third day. After a few days of strength, BABA has been consolidating in the $100-$102 range, and it is now showing signs of readying for the next leg higher.
BABA closed Monday at $103.10, and I expect the stock will make another run at $104.57 and ultimately break through. We recently recommended calls on it in my High Octane Trader service, where we focus on using options to profit from the underlying trends in stocks.
BABA can be volatile, so we went pretty deep in the money with a $90 strike price and out another month on expiration. We made our move after the stock pulled back under $104 and we could buy the calls around $14 to dampen the risk and increase the upside potential. Even just a re-test of the post-earnings high should bring us about 10% profits.