DailyPlay – Opening Trade (BABA) – March 11, 2025

BABA Bullish Opening Trade Signal

Investment Rationale

Alibaba Group Holdings Inc. (BABA) recently emerged from a three-year bottoming pattern that began in early 2022. The stock climbed from $125 to around $140 following the breakout. Despite a pullback yesterday amid the market downturn, there remains considerable upside potential toward our $230 target. With China’s recent deregulation push, the country’s tech and AI ambitions are expected to gain momentum, potentially unlocking shareholder value.  

Despite comparable growth and profitability metrics, BABA trades at a significant discount to its industry. Its forward PE ratio is 13.60 times, well below the industry average of 22.64 times. BABA’s expected EPS growth is 11.38%, compared to the industry average of 9.59%, while its expected revenue growth is 7.15% versus the industry average of 4.92%. Additionally, BABA’s net margins are 12.33%, outperforming the industry average of 9.95%

BABA – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 3 Contracts BABA May 16 $130/$155 Call Vertical Spreads @ $7.92 Debit per Contract.

Total Risk: This trade has a max risk of $2,376 (3 Contracts x $792) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $792 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on an stock that is expected to continue its bullish trajectory.

1M/6M Trends: Bullish/Bullish

Relative Strength: 10/10

OptionsPlay Score: 122

Stop Loss: @ $3.96 (50% loss of premium)

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Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Monday ‘s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

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