If you are a trader looking to make profits from fluctuations in the share price of Alibaba Group Holding Ltd.?s (BABA), look someplace else.
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Alibaba Group Holding Ltd.?s (BABA) smooth sailing since its initial public offering has been a bust for traders hoping to capitalize on volatility.
The average move in Alibaba?s stock over the week following its debut is 2.9 percent, half that of Facebook Inc. (FB) in the period after the social networking site went public in May 2012. Brokerages are charging rates to borrow shares, the first step in a short sale, that are about average for the U.S. market, a sign demand for bearish bets hasn?t surged.
With options trading set to begin today, Alibaba?s stock is behaving as if the company is a decade and a half old with an established history of earnings — which it is. That?s disappointing news for anyone who was hoping to make money by anticipating big fluctuations in the share price.
?The Alibaba IPO was much better-handled and controlled,? Brian Overby, an options analyst for brokerage firm TradeKing LLC in Charlotte, North Carolina, said in a Sept. 24 phone interview. ?That helps out and takes out volatility.? As for options, whose price is derived from equity volatility, ?I don?t think demand will be there like it was in Facebook,? he said.
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