Alibaba options active in U.S. trading debut

Mon Sep 29, 2014 4:26pm EDT
 
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By Saqib Iqbal Ahmed

NEW YORK (Reuters) - Chinese e-commerce heavyweight Alibaba Group's options were among the most active on Monday, their first day of trading, with an even mix of bullish and bearish bets.

The mix implies equal numbers of bets on the Alibaba stock climbing or falling from current levels. The company's shares were down 2 percent at $88.80 on Monday.

Options volume for Alibaba was 122,000 contracts, with 65,000 calls and 57,000 puts traded on Monday, according to data from options analytics firm Trade Alert, making it the day's tenth most active name in the options market.

The volume was about a third of the one-day record volume of 365,000 contracts on Facebook Inc that traded in its options market debut in May 2012.

"It's a tame opening for the first day of options trading," said Brian Overby, senior options analyst at online brokerage TradeKing in Charlotte, North Carolina.

The 30-day implied volatility for the options was at 41.54 percent according to Livevol data. Implied volatility of Chinese Internet stocks Weibo Corp and Baidu Inc were at 60.32 percent and 34.16 percent, respectively.

Implied volatility, a measure of the risk that big moves in the stock pose and a key factor in setting options prices, is typically high for stocks that have recently had their initial public offering.

"I am still showing Alibaba on the easy-to-borrow stocks list so there are not a lot of driving factors to add volatility," Overby said.   Continued...

 
Traders work on the floor as they wait for a final price on the Alibaba Group Holding Ltd. initial public offering (IPO) under the ticker "BABA", at the New York Stock Exchange in New York September 19, 2014.  REUTERS/Lucas Jackson