Alibaba stock surged 29% in two months, closing at $111.32 on Monday. It is now nearing its previous high of $117.52 on October 7 last year, from which it sharply pulled back.

This round of rally was majorly driven by DeepSeek. The success of Chinese artificial intelligence (AI) start-up DeepSeek is prompting investors to reassess the nation’s technology companies that trade at half of the valuation of the “Magnificent Seven” US tech giants.

The consensus among analysts remains bullish for Alibaba, with many citing bullish technical signals and ongoing AI advancements enhancing its competitive stance in the market.

But since the price approached the resistance level, indicating key challenges for further upward movement. Here are some options strategies you can consider based on different market outlooks:

Bullish Strategies (If You Expect a Breakout Above Resistance)

1. Bull Call Spread

   • Buy a $110 call and sell a $120 call. $BABA Vertical 250221 110.0C/120.0C$

   

• Limits risk while benefiting from a breakout above resistance.

• Lower cost than buying a call outright.

Bearish Strategies (If You Expect Rejection at Resistance)

1. Bear Put Spread

• Buy a $110 put and sell a $100 put. $BABA Vertical 250221 100.0P/110.0P$

  

• Limits risk while benefiting from a decline.

• Cheaper than buying a put outright.