Alibaba`s options looking at strong demand on Monday`s market debut
Sunday, September 28, 2014
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Investors will have a new method to start betting on the fortunes of Chinese e-commerce giant Alibaba Group Holding Ltd on Monday when its stock options go live for trading.
U.S. options exchanges, including the Chicago Board Options Exchange, the C2 Options Exchange, ISE and ISE Gemini are expected to starting listing contracts on Alibaba on September 29.
The debut of such listing will allow a flood of speculators and hedgers to start opening positions, each assuming their own on where they think the stock will trade at various future dates.
The puts and calls on Alibaba will likely see strong demand next week given the massive interest shown so far in Alibaba’s shares since its record-setting $25 billion initial public offering last week.
First-day volume in Alibaba’s stock last Friday soared over 270 million shares and has averaged about 40 million shares per day since, which kept it near the top of the New York Stock Exchange’s most-active list each day of the week.
Look out for short sellers! The start of options trading will give short sellers an additional venue for betting on a drop in the stock.
Since shares are hard to obtain to sell short so soon after the IPO, the debut of options trading next week could bring in more shorts into Alibaba and it could place more downward pressure on the stock.
Shares of Alibaba fell 5% over the course of this week after a debut-day gain of 38%.
U.S. options exchanges, including the Chicago Board Options Exchange, the C2 Options Exchange, ISE and ISE Gemini are expected to starting listing contracts on Alibaba on September 29.
The debut of such listing will allow a flood of speculators and hedgers to start opening positions, each assuming their own on where they think the stock will trade at various future dates.
The puts and calls on Alibaba will likely see strong demand next week given the massive interest shown so far in Alibaba’s shares since its record-setting $25 billion initial public offering last week.
First-day volume in Alibaba’s stock last Friday soared over 270 million shares and has averaged about 40 million shares per day since, which kept it near the top of the New York Stock Exchange’s most-active list each day of the week.
Look out for short sellers! The start of options trading will give short sellers an additional venue for betting on a drop in the stock.
Since shares are hard to obtain to sell short so soon after the IPO, the debut of options trading next week could bring in more shorts into Alibaba and it could place more downward pressure on the stock.
Shares of Alibaba fell 5% over the course of this week after a debut-day gain of 38%.
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