Russ Cohen

Opportunities in Alibaba Group Holding (BABA) Options Trading Opportunities in Alibaba Group Holding (BABA) Options Trading

At the outset of 2026, a fresh wave of options has emerged for investors in Alibaba Group Holding Ltd (Symbol: BABA), expiring in January 2026. These new contracts, with 749 days until expiration, present potential openings for sellers of puts or calls to secure higher premiums compared to contracts with a closer expiration. The time value plays a pivotal role in what option buyers are willing to pay. Our YieldBoost formula at Stock Options Channel has scrutinized the BABA options chain for these new January 2026 contracts and noted one put and one call contract of particular significance.

Potential for Higher Premiums

The put contract at the $75.00 strike price currently holds a bid of $13.05. By selling-to-open this put contract, an investor commits to buy the stock at $75.00 but also collects the premium, lowering the cost basis of the shares to $61.95 (before broker commissions). The $75.00 strike signifies a roughly 3% discount to the current stock price, implying the potential for the put contract to expire worthless. The prevailing analytical data suggests a 67% chance of this outcome. Should the contract expire worthless, the premium would equate to a 17.40% return on the cash commitment, or 8.48% annualized — a figure we call the YieldBoost.

Exploring the Calls Side

On the calls side, the call contract at the $85.00 strike price exhibits a current bid of $16.30. An investor could consider purchasing BABA shares at the current level of $77.20/share and then sell-to-open the call contract as a “covered call,” committing to sell the stock at $85.00. The call seller would also collect the premium, potentially yielding a total return of 31.22% if the stock gets called away at the January 2026 expiration (excluding dividends, if any). The $85.00 strike represents an approximate 10% premium to the current trading price, posing a 40% chance of the covered call contract expiring worthless. If this occurs, the premium would boost the extra return to the investor by 21.11%, or 10.29% annualized — referred to as the YieldBoost.

See also  Bitcoin Miners Surge: Marathon Digital and Riot Platforms Bitcoin Miners Surge: Marathon Digital and Riot Platforms

Volatility Insights

The implied volatility in the put contract example stands at 46%, while it is 42% in the call contract example. In contrast, the actual trailing twelve-month volatility is estimated at 41%. As we navigate these opportunities, the historical context and overarching business fundamentals warrant close consideration. For more options contract ideas, visit StockOptionsChannel.com.

Also see: