Look out below!
Shares of Chinese e-commerce giant Alibaba surged more than 3 percent off its lows early Thursday as China's bruised stock market saw its biggest one-day rally since 2009. But on Wednesday, one trader bet the stock could fall as much as 35 percent by September.
When the stock hit an all-time low and options-put volume ran four times its daily average, the trader purchased 12,000 of the September 50-strike puts for 15 cents each. Since buying a put is a bearish strategy that allows a trader to sell a stock at a given price at a set time, this trade is betting $180,000 that Alibaba shares will fall below $49.85 by September expiration.