Dan Nathan Sees Unusual Options Activity In Alibaba

Speaking on

, Dan Nathan analyzed options trading activity in

on Wednesday. The options volume was approximately 2.5 times higher than average daily options volume and the stock rallied 4.79 percent. In the morning session, when the stock was trading close to $82, a trader bought 3,500 contracts of the March 74 puts for $0.25. The breakeven for the trade is at $73.75, which was 10 percent lower at the time of the initiation of the trade. Nathan added that the explanation for the bearish activity could be in the upcoming lock up expiration on March 18, when 429 million shares are going to be available for trading. Implied volatility in

is relatively low and traders are willing to take directional long premium bets.