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BABA Call Spread Buyers Score 3.2% Gain—Here’s What the Trade Tells Us
On September 8, 2025, a large call spread in Alibaba Group Holdings (BABA) options caught attention due to its substantial size and timing. The spread was purchased at a VWAP price of $3.10 and quickly gained value as BABA’s stock inched up, showing a 3.2% gain by 2:45 p.m.—outperforming market averages. This piece dives into the trade’s specifics, potential strategic logic, and how it ties into BABA’s robust technical backdrop.
Trade Details: 2,000-Contract Call Spread Aims for Bullish Payout
Let’s break down the trade that unfolded:
| Trade Component | Details |
|---|---|
| Option Expiration | Sep 12, 2025 |
| Strike Prices | 133-137 Call Spread |
| Number of Contracts | 2,000 |
| VWAP Trade Price | $3.10 |
| VWAP Bid/Ask | $2.90 / $3.25 |
| Reference Stock Price | $140.00 |
| Gain by 2:45 p.m. | 3.2% ($0.10 per spread) |
| Max Profit (If BABA = $137 at Expiration) | ~$90,000 |
For a deeper look at how multi-leg trades work and their risk profiles, check the Multi-Leg Trade Analyzer.
Strategy and Implications: Why Pay $310K for a $90K Max Gain?
The call spread buyer paid over $310,000 for a position that will reach its full value if BABA closes above $137 by the options expiration—just four days out. Since the stock was already above $140 when the trade hit, this is a calculated bet on BABA maintaining its strength. A 3.2% profit on the spread within hours signals immediate market confidence in BABA holding or gaining from current levels. For those interested in screening more of these strategic plays, visit the Multi-Leg Option Trades Screener.
Technical Indicators Signal Clear Uptrend
How do the stock’s technicals look against this backdrop? BABA’s price action supports a bullish posture:
- Current Price: $140.08 (+3.32% on the day, +0.1% from the open)
- Open Jump: 3.2% higher vs. prior close
- 75% above 52-week low, just 5.6% below 52-week high
- Well above key moving averages: +12.0% over 20-day, +17.5% over 50-day, +27.6% over 250-day
- Moving average trends: Uptrend confirmed
- Resistance Broken: BABA surged above daily resistance of $138.54
- Support Not Tested: Remained well above support at $132.62
Below is a performance comparison showing BABA’s returns over multiple periods versus the SPY ETF:
| Duration | BABA Return | Low | High | SPY Return |
|---|---|---|---|---|
| Today | +3.4% | 138.77 | 140.89 | +0.2% |
| 2 Week | +14.0% | 117.60 | 140.89 | +0.5% |
| 1 Month | +19.8% | 117.51 | 140.89 | +3.3% |
| 3 Month | +17.0% | 103.71 | 140.89 | +9.6% |
| 6 Month | -0.5% | 95.73 | 148.43 | +11.8% |
| 1 Year | +70.3% | 80.06 | 148.43 | +19.3% |
| YTD | +65.6% | 80.06 | 148.43 | +11.2% |
| 3 Year | +53.3% | 58.01 | 148.43 | +70.5% |
| 5 Year | -50.0% | 58.01 | 319.32 | +98.6% |
Across most recent periods, BABA has been outperforming the broader market (SPY), reflecting a surge in momentum that fits the call spread buyer’s outlook.
Option Skew Signals Slightly Bullish Market Position
According to Market Chameleon’s proprietary option skew indicator, the current 30-day implied volatility skew stands at the 51st percentile. This places market sentiment as slightly bullish—showing some expectation of further upward movement, but not excessive optimism. A 100% reading would signal maximum bullishness for the year; 51% indicates positive tilt but also some caution as options buyers are not yet chasing aggressive upside bets.
Key Takeaways: Why This Call Spread Could Matter for Traders
This call spread shows how traders are strategically leveraging short-dated momentum in BABA—betting on sustained strength after an impressive multi-week run. Technical trends confirm an uptrend, and option markets project mild bullishness ahead. For anyone watching for market cues or constructing spreads, BABA’s setup and this trade could serve as a useful reference.
Interested in researching more multi-leg option trades like this? Explore opportunities at the Multi-Leg Option Trades Screener.
While nothing in markets is certain, a combination of strong technicals, positive option sentiment, and sharp institutional activity gives BABA a spotlight as this week’s options highlight.
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NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated and may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices and were not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.
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