Abstract: Describe the reasons of trading long call stock options of Alibaba and ARKK, and share the reasons of this strategy.
Transaction detail
Today I am sharing with you about the transaction I made on August 18, the detail is as follows:
- Long call
- Alibaba Corp.（US stock ticker：BABA）
- 100 units of stock option
- Expiration: 2024-06-21
- Strike price: US$90
- Stock price at transaction: US$90.6
- Option price: US$25.2
- Commission fee: US$0.63
- Premium received: US$2520.63
Alibaba Corp. stock 30-day chart
- Long call
- ARK Innovation ETF（US stock ticker：ARKK）
- 100 units of stock option
- Expiration: 2024-01-19
- Strike price: US$47
- Stock price at transaction: US$47.6
- Option price: US$12
- Commission fee: US$1.04
- Premium received: US$1201.04
ARKK stock 30-day chart
Why long call Alibaba and ARKK?
I think Alibaba’s current stock price of about US$90 is very cheap and worth buying. After thinking, and this undervalued stock value has been going on for several years, of course, the main reason is related to the suppression of the mainland policy, but I believe that the time for mean reversion will eventually come, so I decided to try this method of long call Alibaba option, in fact, it is quite speculative, but I do think it is kind of investment, because I am confident in the company’s long-term development, so I decided that it is very likely to increase to a certain extent in the next two years or so. The stock price that started to make a profit is from about US$115.2. I think two years is definitely not short and is actually long enough for Alibaba’s stock price to have a good chance to rise above US$115, so the decision to make this long call is made.
On the other hand, the reason for the long call of ARKK is because I saw ARK invest’s ETFs start to pick up, and I also began to believe that US inflation has a chance to really peak. Personally, I also have great confidence in Cathie Wood. I agree with her ideas that technology will change the future, so I believe that if ARKK rebounds, there is a chance to have a larger rise, so I decided to try to capture the next year and a half to see if there is a chance to have a good increase, the starting point of profit is around US$59. For an active ETF like ARKK, there is definitely a chance to surpass it if it rises finally.
In sum, if you invest in long call option, the most important concept is that its biggest advantage is that the loss is limited and the rising opportunities are unlimited. Of course, it is not really that easy to make money. It requires your vision of picking stocks, and importantly, your patience. To invest in long calls, I suggest you have to have the mental preparation for total losses, so that you will not have too much psychological burden, so it is not suitable for large bet trading. Let’s take a look at the stock price performance after these options expire.
Comments and sharing
I am going to finish it here. If you have any questions, please feel free to leave a message or comment below, I will reply you. Or if you find anything incorrect in the article, please let me know and learn from you. If you find it interesting or it may help you in any sense, please share with other people.
