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The options market believes Alibaba (BABA) shares are poised to extend gains after the giant’s first-quarter earnings, which are scheduled to be released on Aug. 20. That’s significant given BABA is expected to report $1.77 in earnings per share (EPS), which would represent a 6.35% decline versus the same quarter last year.
Still, Alibaba stock is inching higher heading into the earnings event, currently up more than 35% versus its recent low.
Where Options Data Suggests Alibaba Stock Is Headed
As of this writing, the put-to-call ratio on BABA contracts expiring at the end of this week sits at 0.42x, which signals a strong bullish skew heading into the quarterly print.
According to Barchart, the upper price on those options contracts is set at just over $135, indicating potential for a 5.6% rally on the back of the Q1 results.
Investors should also note that Alibaba is currently trading above its major moving averages (MAs), with an RSI in the late 60s indicating intense buying pressure ahead of the earnings event.
BABA shares also currently pay a dividend yield of 0.82%, which further improves their appeal for income-focused investors.
Why Is the Options Market Bullish on BABA Shares?
The bullish options market sentiment may be rooted partly in Alibaba shares’ attractive valuation.
At the time of writing, the Chinese tech titan is trading at a forward price-to-earnings (P/E) multiple of less than 20x, which makes it attractive for a major artificial intelligence (AI) beneficiary.
The AI-driven demand resulted in 38% growth in the firm’s Cloud Intelligence division, and it’s expected to accelerate by more than 40% for the quarter.
Note that Alibaba has historically closed both September and October in the green, a seasonal pattern that makes it significantly more attractive to own in the second half of 2026.
What’s the Consensus Rating on Alibaba?
Crucially, Wall Street analysts are also bullish on BABA stock heading into the fiscal Q1 earnings.
According to Barchart, the consensus rating on Alibaba sits at “Strong Buy,” with the mean price target of about $182 indicating potential for a nearly 45% rally over the next 12 months.
