The Chinese Government May Have Just F-ed Over Every Options Traders in BABA

[Zhong Lu + 845]

Google search 9988 to see Ali Baba's ticker in HK.

Note how it's pegged @200.  It hasn't moved.  Obvious manipulation by someone with a LOT of money, right? Guess what: the Chinese government has an entire team devoted to spending tens/hundreds of billions of dollars to peg currencies, prices, etc.  

If this continues in the coming weeks, everyone who bought out-of-the-money call or put options on BABA are fucked.  

I'm interested in the underlying equity, so I don't mind and I can wait. But Jesus.  This is their way of saying "if you're buying BABA, you're investing, not trading."  This would also be a way to make sure the HK traders don't run the price up before the people in mainland China can buy.  

Again, this is just a hypothesis.  Will see what happens tomorrow.  But if this trend continues, all of the out-of-the-money options buyers just got fucked.  

Edited November 28, 2019 by Zhong Lu

[Zhong Lu + 845]

EDIT: Ok.  The government is letting the stock run.  But slowly.  If it goes up too much in one day, they manipulate it to shut down the price action.  

Edited November 28, 2019 by Zhong Lu

[Zhong Lu + 845]

Either that or a bunch of stupid hedge funds were caught selling call options on BABA and spent all their ammo trying to keep the price below 200 (and failing miserably).  If that's true, expect to hear some hedge fund go belly up because they shorted BABA at the wrong time.  

Now that I think about it, that's the more likely explanation for the price action in Hong Kong today.  Someone thought BABA was overvalued and/or China's economy stunk and had a leveraged position in call options that just blew up in their faces.

EDIT: Also, really smart move by the management team of BABA btw.  American hedge funds have something biased against China and its economy.  Constantly saying it's less valuable than Amazon despite the fact that BABA is LARGER than Amazon and also extremely profitable.  blah blah blah.  So the management team of BABA listed the stock on Hong Kong's exchange.  Now these hedge funds are going to discover just how much demand there actually is for BABA in China.  

Edited November 28, 2019 by Zhong Lu

[Zhong Lu + 845]

Nope. Someone IS f-ing with the options buyers. I was right the first time, sorta.  Might not be the government though. Can't be sure.  

Revision: they let it rip in the last hour yesterday to suck in call buyers.  Then crush them into a bloody pulp today.  

Underlying equity is doing fine.  Hang Seng index is doing poorly.  I don't particularly care as I'm in the equity.  

Having fun mostly.  HSI down 2%. BABA is flat.  Shows the extent of the demand for this thing.  Still, worrisome that HSI is getting creamed.  

Edited November 29, 2019 by Zhong Lu

[Zhong Lu + 845]

I don't like to worry. Out.  VIX is ticking up, S&P futures down, S&P trading at top/highs, etc.  Taking my 7% and going.  Looking to jump back into UGAZ.  Maybe short S&P.  Will return to BABA later.  

Remember: after you sell, you can always buy back later at a higher price.  I know this "strategy" sounds utterly stupid, but it's not.  

Edited November 29, 2019 by Zhong Lu