iNVEZZ.com, Wednesday, September 17: Investors will be able to trade Alibaba Group options in two weeks, it has been revealed.
CBOE Holdings Inc yesterday announced that the Chicago Board Options Exchange (CBOE) and C2 Options Exchange (C2) are planning to list options on the Chinese e-commerce giant on September 29.
In a separate release, International Securities Exchange Holdings (ISE), which operates the ISE and ISE Gemini options exchanges, said that its markets would also list Alibaba options on the same date. Together, CBOE and ISE markets account for more than 40 percent of US stock and exchange options traded so far this year, according to OCC, formerly the Options Clearing Corporation.
CBOE said that it would be listing Alibaba options once new options listing criteria were met, while ISE noted that its listing was contingent on a successful completion of Alibaba’s initial public offering (IPO).
Shares in the e-commerce group are expected to commence trading on the New York Stock Exchange on Friday. The IPO could set a new global record for the biggest float. After boosting the float price range on Monday to $66 to $68 per share, Alibaba and selling shareholders are now looking to raise up to $21.8 billion in the share sale, which is just shy of the $22.1 billion raised by Agricultural Bank of China in 2010 (Alibaba raises price range to $66-$68 a share ahead of IPO date). This amount could be surpassed if banks working on the Alibaba share sale exercise an allotment option. The Chinese company could also place the final price above the current range, which would boost the IPO value.
The maximum market valuation of $167.6 billion, implied by the current price range, is well below the most optimistic analyst estimates. During a meeting with potential investors in Hong Kong, Alibaba’s founder Jack Ma reportedly said that the company would not seek too high a valuation. Some analysts have suggested that this move is aimed at avoiding a repetition of Facebook Inc’s (NASDAQ:FB) 2012 IPO flop and to ensure that the company will have room to grow after the float.
The Alibaba options will allow investors to hedge their bets or speculate on the performance of the company’s shares following their trading debut. Contract specifications for the options will be determined when the new listing is certified by OCC prior to trading, ISE said in its statement.