Alibaba closed at $108.07, up 2.64%.
Despite the positive session, large options trades revealed a defensive and bearish tone. A $7.48 million deep in-the-money put purchase dominated flow, signaling conviction in downside protection, while a $1.01 million short strangle collected premium in a range-bound view. Elevated implied volatility at the 96th percentile adds a premium-selling backdrop, but the dominant capital allocation leaned clearly bearish.
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Options Indicators
Alibaba’s implied volatility is 51.38%, and with an IV percentile of 96.02%, current option volatility is sitting at a clearly elevated level versus its own recent history, indicating that Alibaba’s options are priced expensively rather than cheaply. The IV/HV ratio of 1.42 further suggests implied volatility is running meaningfully above realized volatility, showing that the options market is embedding a sizable premium for expected movement.
The Call/Put volume ratio is 2.74.
Large Trades
A PUT buy worth $7.48 million was the standout large trade, with 1,030 contracts of the January 15, 2027 $180.0 put purchased while the stock reference price was $108.1. This strike is deep in the money, making it an intrinsically valuable bearish position with substantial downside sensitivity. Strategically, this kind of long put trade points to a defensive or outright negative view on BABA over a long-dated horizon, as the buyer is paying a significant premium to secure downside exposure and portfolio protection.
A $1.01 million net-credit short strangle was also highlighted, consisting of the sale of 1,250 February 19, 2027 $95.0 puts and the sale of 1,250 February 19, 2027 $130.0 calls, with both legs out of the money. As a spread-style premium-selling combination, this structure brings in a net credit of $1.01 million and signals a range-bound or volatility-selling stance rather than a strong directional bet. The seller is effectively expressing the view that BABA is likely to remain between $95 and $130 into expiration, seeking income from time decay while accepting risk if the stock makes a large move in either direction. Overall, the bulk-order flow leans clearly bearish on BABA, as the dominant capital was concentrated in downside protection and bearish positioning, while the premium-selling combination was more neutral-to-income-oriented and did not offset the negative tone set by the large long put activity.
Strategy Reference
For sellers seeking low assignment probability amid elevated IV, the February 19, 2027 $85.00 put sits further below the $95.00 short put already traded, offering additional cushion, while a bear put spread using the $180.00 and $160.00 January 2027 strikes can express downside conviction with reduced upfront cost and limited margin versus a naked long put.
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