BABA - Triple-topping: What to do with the upcoming earnings?

BABA’s exceptional run seems to be triple-topping. While the long-term trend remains up, the short and mid-term pictures look like they have turned to the downside. The company should announce earnings on Feb 1 before market open and I would wait for this catalyst to go long, just in case any fundamental disappointment should take us lower to confirm the poor, current technical picture. In line with the strategy I proposed on NFLX (see below), the game consists in buying synthetic upside exposure ahead of earnings. If the stock breaks out, you will be exposed to the upside. If the stock remains range-bound, you will lose a small premium. If the stock disappoints and tanks, you could decide to lose your premium or to sell a put to make your lost premium up.

1. BUY BABA Feb 16'18 $182.5 CALL = $6.90 (3.78%)

OR

2. BUY BABA Feb 16'18 $192.5 CALL = $3.32 (1.82%)

評論:

BABA is re-testing its resistance and yesterday actually closed above 192 in twice average volume. This suggests the stock could be breaking out even ahead of earnings. The calls I recommended 2 days ago have now roughly doubled in value:

1. Feb 16'18 $182.5 CALL = $13.42 --> +94.5%
2. Feb 16'18 $192.5 CALL = $3.32 --> +128%

Keep holding the calls into earnings, if you have purchased them.

評論:

In my previous post, please read the following:

2. Feb 16'18 $192.5 CALL = $7.57 --> +128%

instead of what I wrote which was incorrect.

Thank you.