BABA Bulls Reach for Calls as Earnings Loom

Alibaba heads into its September 22 quarterly print with options traders making their most bullish bet of the past year.

The clearest signal is in the options market. The put/call ratio has dropped to 0.497 — a full 2.2 standard deviations below its 20-day average of 0.584, and the lowest reading recorded over the past 52 weeks. That is an unusually aggressive tilt toward calls ahead of an earnings release, suggesting traders are positioning for upside rather than buying protection. The shift is sharp: as recently as mid-August, the PCR ran above 0.67. Something changed, and it lines up with a 4.3% one-day rally on September 18 that has partially clawed back a 12% slide over the prior month.

The lending market tells a much calmer story. Borrow availability has eased substantially from where it was through late August, when it sat below 95%. It now runs at 154% — meaning there are roughly 1.5 shares available in the lending pool for every one already borrowed. Cost to borrow is also subdued at 0.53%, having drifted in a tight range since mid-year. Short interest itself has edged lower all month, falling around 0.5% over the past week to approximately 41.8 million shares. None of this points to meaningful squeeze pressure; the bearish conviction in the lending market is fading, not building.

Analysts who reacted to the last print — most notably JP Morgan and Barclays, both of whom lifted targets in the days following the August 20 report — remain constructively positioned heading into this release. JP Morgan's Alex Yao holds a $210 target and Barclays an Overweight with a $200 target. Baird trimmed its target slightly to $160 while keeping an Outperform rating, the lone note of caution in recent weeks. The bull case centres on cloud computing momentum and a 20% jump in Taobao daily active users following the integration of instant commerce. Bears point to e-commerce EBITA margin compression, a quarterly loss exceeding RMB 36 billion, and negative free cash flow driven by heavy investment in quick commerce infrastructure. The stock's P/E has compressed roughly three points over the past 30 days to 12.8x, which has so far done little to close the gap with price targets ranging from $160 to $210 — all well above the current $113 handle, a level that itself warrants flagging against those targets as a reminder of how far BABA has fallen from its highs.

On the insider front, both Chairman Joseph Tsai and CEO Wu Yongming made open-market purchases in late August — Tsai deploying over $20 million across two days, Wu adding roughly $5 million. Neither trade was flagged under a pre-arranged 10b5-1 plan, making the discretionary buying a notable data point. The stock fell sharply after the August 20 print — down 7.4% on the day and nearly 10% over the following week — which makes the insider conviction that followed all the more pointed. Close peers JD and PDD were both in the red on the week heading into the event, while AMZN gained — leaving BABA's 4.3% Friday surge looking like company-specific positioning rather than a sector lift.

The September 22 print will therefore test whether cloud revenue and user-engagement trends can justify the call-heavy positioning and the insider conviction, against a recent track record that has punished disappointments sharply.