Scott Bauer Explains The Safer Way to Play on Yahoo! Inc. (YHOO) Ahead of the Alibaba IPO


Yahoo! Inc. (NASDAQ:YHOO) is in a very sweet position now. With the quarterly results and the Alibaba IPO setting up very near, it is in a win-win situation. The company’s stock has been on upside for over a week.


Scott Bauer, Senior Market Strategist at Trading Advantage, was on Bloomberg and he discussed few of his investment strategies. He trades on Yahoo! Inc. (NASDAQ:YHOO) and he said that the gap between the earnings announcement and the Alibaba IPO is not much which would benefit Yahoo! Inc. (NASDAQ:YHOO) a lot. He explained how the company broke the 200 day moving average around this hype.

“We have earnings on the 15th and then we have the Alibaba IPO shortly after that.” Bauer said explaining the sweet spot Yahoo! Inc. (NASDAQ:YHOO) is in.

He said that he would be buying the ‘August 36’ call and would be selling the “August 41 Call” with a 5$ spread with the range of $130 – $1.40; so it has an upside potential of $5. He said that he doesn’t want to buy the stock and an option play like this would help him better as the $41 is near the all-time high of Yahoo! Inc. (NASDAQ:YHOO) and he feels that it’s an apt strategy to use the options based trade.

John Thaler’s Jat Capital Management owns about 7.6 million shares in Yahoo! Inc. (NASDAQ:YHOO) as of March 31st 2014 and is one of the key investor in the company. The other key investors are Farallon Capital with over 5.7 million shares and Cadian Capital with approximately 4 million shares in the company.

Gene Munster of Piper Jaffray has recently mentioned that the stake of Yahoo! Inc. (NASDAQ:YHOO) in Alibaba is undervalued and that the IPO would help boost the stock.

Disclosure: None