BABA Options Trading — Covered Calls, Puts & the Wheel
A complete guide to selling options on Alibaba Group. Expected premiums, strike selection, real example trades, and the four strategies that actually work for BABA.
Why trade options on BABA?
BABA (Alibaba Group) is a large-cap consumer discretionary name with a low share price and excellent options liquidity. Implied volatility is high enough to pay meaningful premium without being wild, which is why this ticker shows up frequently in wheel-strategy watchlists. It pays no dividend, so every dollar of income must come from the options you sell.
Typical monthly premium collected on BABA runs around 2.0-3.5% of capital, which annualizes to roughly 24-42% if you sell new contracts every cycle. Capital required to run a single contract wheel on BABA is under $5,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Four strategies that work on BABA
BABA Covered Call
Sell upside calls against 100 shares you already own to collect premium every month while capping your upside.
Read the BABA Covered Call guide →BABA Cash-Secured Put
Sell a put backed by cash so you either get paid to wait or acquire the stock at a discount to today's price.
Read the BABA Cash-Secured Put guide →BABA Wheel
Alternate between cash-secured puts and covered calls on the same ticker to generate continuous premium income.
Read the BABA Wheel guide →BABA Poor Man's Covered Call
Replace the 100 shares with a long-dated deep-ITM LEAPS call and sell short-dated calls against it to reduce capital.
Read the BABA Poor Man's Covered Call guide →BABA options FAQ
What is the best strike price for a BABA covered call?
On BABA, target 8-12% out of the money at 0.15-0.25 delta. On a high-volatility stock like this, closer-to-the-money strikes chase premium but spike assignment probability to uncomfortable levels.
How much premium can I collect selling calls on BABA?
Typical monthly premium on BABA is 2.0-3.5% of position value, annualizing to 24-42% when you roll every cycle. Earnings months can pay 2-3x the normal rate because of elevated IV.
What is the best delta for a BABA cash-secured put?
A delta of 0.15-0.25 on BABA balances premium income with assignment probability. Many traders anchor to 0.20 delta as a starting point and adjust based on their willingness to own shares.
How much cash do I need to sell a put on BABA?
Cash required is 100 × strike price. For BABA, that's roughly under $5,000 per contract at a typical strike. Most brokers let you use margin, but for a true cash-secured put you set aside the full amount.
Is BABA a good stock for the wheel strategy?
BABA is excellent for the wheel because of its penny-wide spreads and elevated IV (high premium, higher assignment risk). No dividend means all your return comes from premiums and price appreciation.
Can you run a poor man's covered call on BABA?
Yes. Buy a 0.80+ delta LEAPS on BABA dated 12-18 months out as your synthetic long, then sell short-dated calls 8-12% above the stock at 0.15-0.25 delta. Capital tied up drops from under $5,000 to roughly 30-50% of that — a meaningful improvement when the share price is a low share price.
What expiration should I use for BABA options strategy trades?
Use 21-35 DTE to capture IV without excess gamma risk as a default for BABA. This window captures the steepest part of the theta curve without excess gamma risk.
Is BABA suitable for beginners selling options?
Yes — it's a well-known, liquid name with established options markets, which is what beginners need.
Run the numbers on BABA yourself
Use the free OptionsPilot calculator to price covered calls and cash-secured puts on BABA with live quotes.
Open the BABA Strike Finder →