Alibaba closed at $113.24, marking a 4.33% increase.
The day’s rebound was not matched by bullish options flow. Large institutional sellers dominated the tape, with two displayed call sales totaling $534,800, both positioned at out-of-the-money strikes and both leaning against further upside. This activity suggests the rally is being viewed as an opportunity to collect premium rather than chase momentum.
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Options Indicators
BABA’s implied volatility is 47.14%, and with an IV percentile of 52.19%, current volatility sits in a neutral range rather than at an extreme. The IV/HV ratio of 1.21 shows implied volatility is running moderately above historical volatility, suggesting the options market is pricing in somewhat higher forward-looking movement, but not at a level that would be considered notably expensive. Overall, BABA options appear fairly priced to slightly rich, rather than cheap. The Call/Put volume ratio is 3.28.
Large Trades
A CALL sale worth $341,100 stood out as the largest displayed single-leg trade, with 1,137 contracts sold at the 116.0 strike expiring on 2026-10-09. With BABA referenced at 113.15, this call was out of the money at the time of the trade. The positioning is bearish to neutral, as the seller is effectively expressing the view that upside through 116.0 is limited over the life of the option and is seeking to collect premium from time decay rather than pay for upside exposure.
A CALL sale worth $193,700 was the other displayed large trade, consisting of 3,283 contracts sold at the 140.0 strike expiring on 2026-10-16. This strike was also out of the money versus the 113.15 spot reference, and even farther above the current stock price, reinforcing a bearish to neutral stance. The trade suggests the seller sees low probability of BABA rallying to that level by expiration and is using far-out-of-the-money call premium collection as an income-oriented or capped-upside view rather than positioning for bullish follow-through.
Overall, the large-trade flow points clearly bearish. The dominant activity was concentrated in call selling, with both displayed trades leaning against upside and the broader block-order picture also showing an exclusively negative skew. That pattern indicates institutional participants were more interested in harvesting premium from upside calls than paying for bullish exposure, suggesting expectations for muted upside, resistance overhead, or a preference to position cautiously rather than anticipate a strong advance in BABA.
Strategy Reference
For a low assignment probability, a seller could consider the 140.0 strike expiring 2026-10-16, which is far out of the money and aligns with the displayed institutional flow; alternatively, a bear call spread using the 116.0 and 140.0 strikes would cap margin requirements while expressing a limited-upside view.