Alibaba Soars 3.35% as Global Tech Rally Ignites Optimism

Summary
• Alibaba (BABA) surges 3.35% to $121.23, outpacing the S&P 500’s 10.9% quarterly return.
• Nvidia’s H20 chip export approval to China sparks renewed AI sector enthusiasm.
• Hang Seng Index hits a 3-year high, with Alibaba and PDD Holdings leading the charge.
• Options volume spikes 250% on July 25 expiration, signaling speculative fervor.
Alibaba’s intraday surge reflects a confluence of geopolitical tailwinds and AI-driven optimism. With U.S.-China trade tensions easing and Chinese tech stocks rebounding, the stock has broken above its 200-day moving average of $109.20. This move aligns with a broader global rally in AI infrastructure, as evidenced by Nvidia’s 4% pop and the Hang Seng’s 1.3% gain.

U.S.-China Trade Easing Fuels Alibaba’s Bull Run
Alibaba’s 3.35% intraday gain is directly tied to the U.S. government’s decision to ease chip export restrictions to China, a move that has reignited investor confidence in the tech sector. The easing of restrictions allows Alibaba to access advanced AI chips, bolstering its Qwen model development. Additionally, the Hang Seng Index’s 3-year high—driven by improved trade relations and strong U.S. economic data—has amplified demand for Chinese tech stocks. This confluence of factors has created a short-term bullish momentum, with Alibaba’s stock price surging past its 30-day moving average of $113.95.

Internet Retail Sector Rallies as Alibaba Outpaces Amazon
While Alibaba surged 3.35%, its sector leader Amazon (AMZN) rose a more modest 0.5%. The disparity highlights Alibaba’s unique positioning in the AI and cross-border e-commerce space. The easing of U.S. chip export rules has disproportionately benefited Alibaba’s cloud and AI divisions, whereas Amazon’s global retail operations face broader macroeconomic headwinds. This sector divergence underscores Alibaba’s potential to outperform in a trade-recovery narrative.

Bullish Call Options and ETFs to Capitalize on Alibaba’s Momentum
• MACD: -1.068 (Signal Line: -2.204, Histogram: 1.136) – Positive divergence suggests bullish momentum.
• RSI: 55.45 – Neutral to overbought zone, indicating potential for further gains.
• Bollinger Bands: $119.92 (Upper), $111.78 (Middle), $103.64 (Lower) – Price near upper band, signaling overbought conditions.
• 200-day MA: $109.20 (Below current price).
Alibaba’s technicals point to a continuation of its bullish trend. The stock is trading near its 52-week high of $148.43, with key resistance at $122.16 (intraday high) and support at $119.97. Short-term traders should monitor the 200-day moving average as a critical breakout level. Given the options chain’s liquidity and leverage ratios, call options offer asymmetric upside potential.
Top Call Option 1: BABA20250725C120
• Strike: $120 | Expiration: 2025-07-25 | IV: 34.88% | Leverage: 39.06% | Delta: 0.583 | Theta: -0.3805 | Gamma: 0.0624 | Turnover: 2,009,049
• IV (34.88%): Reflects moderate volatility expectations.
• Leverage (39.06%): High gearing for amplified returns.
• Delta (0.583): Balanced sensitivity to price moves.
• Theta (-0.3805): Significant time decay, ideal for short-term holds.
• Gamma (0.0624): Strong responsiveness to price swings.
This contract offers a 84.52% price change ratio, with a projected payoff of $10.23 per share under a 5% upside scenario (ST = $127.29). Its high liquidity and gamma make it ideal for capitalizing on a breakout above $122.16.
Top Call Option 2: BABA20250725C122
• Strike: $122 | Expiration: 2025-07-25 | IV: 36.40% | Leverage: 54.79% | Delta: 0.459 | Theta: -0.3426 | Gamma: 0.0608 | Turnover: 957,979
• IV (36.40%): Slightly elevated but reasonable for short-term plays.
• Leverage (54.79%): Aggressive gearing for high-reward scenarios.
• Delta (0.459): Moderate sensitivity to price action.
• Theta (-0.3426): High time decay, suitable for quick trades.
• Gamma (0.0608): Strong responsiveness to volatility.
With an 88.89% price change ratio, this option projects a $5.29 payoff (ST = $127.29). Its high leverage and liquidity make it a top pick for a continuation of Alibaba’s rally.
Trading Hook: Aggressive bulls should target the BABA20250725C120 if the $122.16 intraday high is retested. Conservative buyers may consider the BABA20250725C122 for a high-leverage, short-term play.

Backtest Alibaba Group Stock Performance
Following a 3% intraday surge, Alibaba's (BABA) short-term performance has historically shown mixed results. While the 3-day win rate is 49.40%, indicating a higher probability of positive returns in the immediate term, the longer-term outlook is less favorable. The 10-day win rate is 49.06%, and the 30-day win rate is 45.28%. This suggests that while BABA may experience a brief uptick in price following a strong intraday performance, it is not always followed by continued gains. The maximum return observed was 0.21% over 45 days, which is relatively modest.

Alibaba’s Bull Run Gathers Steam—Act Now to Secure Gains
Alibaba’s 3.35% surge reflects a perfect storm of geopolitical tailwinds, AI sector optimism, and a broader rebound in Chinese equities. The stock’s technicals—positive MACD divergence, overbought RSI, and break above key moving averages—suggest the rally could extend to the $127.29 level. Traders should monitor the $122.16 intraday high as a critical breakout point and the $119.97 support level for any pullbacks. Meanwhile, Amazon’s 0.5% rise in the sector underscores Alibaba’s outperformance, making it a prime candidate for further upside. For immediate action, prioritize the BABA20250725C120 for a balanced bet or the BABA20250725C122 for high-leverage exposure.