Alibaba Stock Analysis: Is It Time To Back Up The Truck On BABA Stock? (Triple Income Wheel)

Alibaba Group (BABA) was down another 11% yesterday after reporting earnings and missing revenue and EPS estimates. The company also lowered full year guidance due to slower economic activity and continued anti-monopoly regulations.

However, if any Chinese company deserves a look during this regulatory uncertainty...it's certainly the "Amazon of China". Alibaba is the second largest Chinese stock (by market cap) and is looking very attractive at current levels.

The stock is now very close to long-term support at the $140 level and we think the risk/reward is very attractive here.

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Great Facebook Groups Discussing the Wheel:
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Cash Secured Puts: https://www.facebook.com/groups/cashsecuredputs

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Alibaba is the world's largest online and mobile commerce company, measured by GMV (CNY 6.6 trillion/USD 1 trillion for the fiscal year ended March 2020). It operates China's most-visited online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba's China commerce retail division accounted for 69% of revenue in the December 2020 quarter, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commission fees. Additional revenue sources include China commerce wholesales (2%), international retail/wholesale marketplaces (5%/2%), cloud computing (7%), digital media and entertainment platforms (4%), Cainiao logistics services (5%), and innovation initiatives/other (2%). (Source: YCharts)
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Note that if you want to give yourself some additional cushion on the downside, the cash-secured puts are also extremely attractive.

Cash-Secured Put Trade:
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BABA Dec 17th $125.00 Put
Option Premium: ~$2.02 premium
Average Monthly Yield %: 1.7% (20.4% annualized)
Margin-of-Safety %: 13.0%
Delta: 16


DISCLAIMER--------------------------------------------------------------------------------------------------------------------------------------
Parsimony Investment Research and/or it's affiliates may or may not have a position in the stocks and/or options mentioned in this video at the time of publication. The information contained within this video is for informational and educational purposes only and it is not intended as a recommendation of the securities highlighted or any particular investment strategy; nor should it be considered a solicitation to buy or sell any security. The strategies and securities mentioned in this video may not be suitable for all types of investors and the information contained in this report does not constitute advice. Past performance is not a guarantee of future results. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker.