The key to the BABA Trade – Patience

There are about 23 days to expiry for the BABA Trade. The options expire on November 17.

I plan to wait until 15 days remaining to roll the trade. That’s about a week from now.

I mentioned in the last post that my delta on this trade is only about 5%. So when BABA stock falls around $5, I only lose about $0.25 of that.

As you can see from the graph above, options lose most of their value (>50%) with under 20 days to go. So, I need to be patient. I need to wait about a week to try to roll this trade in order to collect most of the $1.09 intrinsic value I was trying to capture.

Right now, I am still profitable in the trade. But I’ve only made about $0.40 in profit. I want to get closer to the $1.09. I hope that the price doesn’t fall below $70 in the next three weeks.