Mike Khouw Weighs In On Alibaba

On CNBC's "Options Action," Mike Khouw said that what the Chinese government has been doing lately has largely made Chinese stocks uninvestable. This is hard because Alibaba Group Holding Ltd - ADR BABA is trading around 15 times 2023 EPS estimates. For the company that is growing as fast as Alibaba is growing, it looks very, very cheap, said Khouw.

He would consider starting a long position, but only with options. Khouw would use call spreads or call spread risk reversals because options premiums are high. He would choose well out of the money puts to help to finance the purchase of a call spread.