The news caused Alibaba’s stock to gap up and make a run into a resistance level at the $212 mark. The move also popped the stock firmly back over a descending trendline it had been grappling with since reaching an all-time high of $319.32 last October.
When the markets opened Tuesday morning, a number of bullish options traders came in and purchased call contracts of Alibaba. The action was followed by a comparatively larger amount of money spent on put contracts after the stock banged into its upper resistance level and was unable to breakthrough.
In total, bearish options traders bet over $3.06 million Alibaba’s stock is headed lower over the next weeks and months regardless of whether Alibaba is able to reach a deal with Unisplendour.
See Also: How to Buy Alibaba Stock
Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.
These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.
The Alibaba Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:
BABA Price Action: Alibaba was trading up 2.2% to $210 at publication time.
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