Monday, November 3, 2014

Alibaba Ahead of Earnings - Expectations and Implied Volatility

Alibaba, ticker symbol BABA, is reporting earnings before the market opens tomorrow.  The street has high expectations, but not to worry because it is estimated that online Chinese sales will grow about 45% this year.  Alibaba has approximately 80% of the online market.

The options market is still implying about a 5% volatility from these earnings, despite the 3.47% current gain in BABA shares so far today.  I bought more BABA stock today, and expect that these earnings are going to be a blockbuster.

I believe that we have yet to see a big move in the stock, so far the gains and price swings have been minimal.  I expect that it will change starting with the earnings report and believe that Alibaba is in better position than Twitter and Facebook were for their first earnings annoucements as publicly traded companies.

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