Alibaba (BABA), the leading global wholesaler in China, has had a good month, and the overall projection of the stock looks promising. However, with only a little over two weeks left on these contracts and with the volatile market in China, I want to close our short-term position.
I normally might be inclined to let this trade ride a bit longer based on the current price action. However, there are too many variables, including Covid related shutdowns, and any of those variables could easily make this stock fall without warning, causing our spread to be worthless.
Here I would like to close our bull call spread for $5.60, giving us $540 of profit on a minimum order. This gives us a 41-day 93% return or 829% annualized.