Patience on BABA | Live Options Day Trade

On this options day trade we were looking to take advantage of a two day flush point on BABA (AliBaba). We had a known entry point, target, and stop loss all in place before even entering the trade.

The key take away on this trade is how being patient on BABA paid off. We were constantly checking in on the direction of the broad market to determine if we were fighting the overall trend or inline with what was happening on the day. You’ll also see that other tech companies (which BABA falls under the category of) were also selling off this particular morning which gave added confidence in holding the trade.

Notice also how we use key sign posts to gauge the strength of which traders are in control of the day. The first was, how far do we retrace into prior days range. Second, can we get back down below the open. Third, can we take out the low of day.

When trading options picking the right strike and expiration for the contract is key. On this trade we are using this weeks weekly options, and using the strike just at the money, but not an in the money put option. If you want to learn more about strike and expiration selection feel free to join the discord server linked above and discuss in the trading community.

We used options instead of day trading the stock outright on BABA because our profit potential is much greater and capital allocation is much less. Imagine needing $22,800 to have the same exposure that we had using only $350.