Alibaba Group Holding Ltd (BABA)

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Alibaba Stock Rises on Investment Moves
By: Schaeffer's Investment Research | October 20, 2020

• Alibaba is investing in retail companies

• Yesterday, BABA scored a new record high

The shares of Alibaba Holding Group Ltd (NYSE:BABA) are up 1.7% at $310.47 at last check, amid a series of new acquisitions. The China-based retail and e-commerce giant took a 6.1% stake in travel retailer Dufry, as well as investing $3.6 billion to receive a controlling stake in Sun Art Retail Group -- a supermarket operator in China. Furthermore, Ant Group, a financial tech name that is 33% owned by Alibaba, has received approval from the Hong Kong stock exchange for its initial public offering (IPO).

Yesterday, the stock broke out past pressure at the $310 level hit to a record high of $313.81 before pulling back to close lower. Today, BABA is once again making a run past that trendline, and is up 46% year-to-date, with support coming from its 40-day moving average.

The shares are ripe for a short squeeze. Short interest increased by 18% in the most recent reporting period to 46.47 million shares. This accounts for a whopping 14.3% of BABA's total available float, and 3.3 times the average daily trading volume.

The options pits are call-dominant. BABA sports a 50-day call/put volume ratio of 3.08 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 83% of all other readings in its annual range, meaning long calls have been picked up at a faster-than-usual rate. Today, new positions are being opened at the weekly 10/23 315-strike call, expiring at the close this Friday.

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