After languishing for multiple years, Alibaba (BABA) has finally started to show some momentum and signs of a potential turnaround for its business. This aligns with developments in China, where the government is easing regulatory pressures on its tech sector to revitalize the economy and accelerate its AI ambitions to rival America. BABA, a titan in China’s e-commerce and tech landscape, is at the forefront of this AI revolution, leveraging its vast ecosystem to drive innovation. The return of co-founder Jack Ma, who has re-emerged as an influential figure after years of regulatory scrutiny, signals renewed confidence in BABA’s growth potential. With BABA trading at a significant discount while maintaining solid growth and profitability, this creates a powerful narrative for substantial upside. If we look at the chart, it shows BABA has emerged from a prolonged bottoming pattern over the past two years between $70 and $120, recently breaking out with strong momentum. This breakout, accompanied by outperformance relative to the S & P 500, indicates a shift in market sentiment and potential institutional accumulation. Our upside target provides significant room at $230. Fundamentals BABA trades at a significant discount to its industry, despite growth and profitability metrics that are either in line or exceed its industry. This undervaluation, combined with China’s latest deregulation push, positions BABA for substantial shareholder value unlock as it harnesses its Tech and AI ambitions to compete with the U.S. Forward PE Ratio: 14.6x vs. Industry Median 22.6x Expected EPS Growth: 9% vs. Industry Median 9% Expected Revenue Growth: 7% vs. Industry Median 5% Net Margins: 12.3% vs. Industry Median 9.9% To capitalize on BABA’s growth potential and its recent elevated implied volatility. I’m harnessing options premium by selling an April 4 th $134/123 Put Vertical @ $4.40 Credit. The trade This entails: Selling the April 4 $134 Puts @ $8.00 Buying the April 4 $123 Puts @ $3.60 The maximum reward is $440 if BABA is above $134 at expiration. The maximum risk is $660 if BABA is below $123 at expiration. The breakeven point for this trade is around $129.60 This strategy benefits from BABA’s anticipated rally, harnessing its breakout, undervalued fundamentals, and leadership amid the country’s deregulatory momentum and Jack Ma’s renewed influence. With BABA poised to capitalize on China’s push to rival the U.S. in technology and innovation, this options trade offers a compelling opportunity to profit from the stock’s significant upside with a limited risk that aligns with the growth narrative. View this Trade with Updated Prices at OptionsPlay . DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
