Alibaba Options Trading Begins

The video discusses the recent uptick in the VIX and its implications for market volatility, noting that the spot VIX is above the first three months of futures, which typically signals a potential decrease in volatility. However, the speaker suggests a cautious approach, considering it a cross-asset volatility event. The video then shifts focus to Alibaba's options market, highlighting the stability of its stock post-IPO compared to other tech IPOs like Facebook and Twitter. The implied volatility for Alibaba is lower, indicating stability, and the speaker suggests monetizing this by selling calls, especially for long-term institutional holders.

What does it indicate when the spot VIX is above the first three months of futures?

• Stocks are expected to decline.

• The market is stable.

• Volatility is expected to fall.

• Volatility is expected to rise.

How does the market typically react to inversions in the VIX?

• Investors hold cash.

• Investors sell stocks.

• Investors buy stocks.

• Investors buy bonds.

How does Alibaba's implied volatility compare to Facebook and Twitter after their IPOs?

• Higher than both

• Lower than both

• Same as Twitter

• Same as Facebook

What is a suggested trading strategy for Alibaba options given the current implied volatility?

• Buying puts

• Selling calls

• Buying calls

• Selling puts

Why might institutional holders of Alibaba stock consider selling calls?

• To avoid market volatility

• To increase stock holdings

• To reduce stock price

• For tax reasons