BABA Spike: Dead Cat Bounce?

2020年12月30日

I've been watching BABA over the past week as much hype has surrounded its recent fall. There has been a lot of bragging about profits made on the dip buy and if you've read my posts for long enough you know my cardinal rule, especially when it comes to options, is "if you're bragging, you should be taking profits!"

I'm not one to jump in just to be contrary but the stock price did exhibit a bearish spike at a major resistance this morning. This sets up a play back down to retest the recent low.

I did not like the Single options as they are volatility elevated so I went with a Vertical Put spread to express the trade.

2020年12月30日

註釋

On the longer term chart...

I don't know what the Chinese government plans to do but I do look at technicals. The fall broke through the 50% AND the 61.8% of the 2020 recovery rally... that's not good by any measure. Now it is coming back to test that 50% as resistance.