Alibaba's initial public offering on the New York Stock Exchange is tipped to raise more than $US21.1 billion ($23.2 billion), which would knock Facebook off top place for tech floats.

Alibaba is seen as attractive to investors because it offers direct and diversified access to China's burgeoning middle class. It accounts for almost 80 per cent of Chinese e-commerce volume through several online products, including the Chinese equivalent of eBay, and a range of shadow banking platforms such as trust funds management and payment systems.

Last year, almost $US300 billion worth of products was purchased in its marketplaces and the core company made $US2.5 billion in profit.

The company initially attempted to list on Hong Kong's stock exchange before it was rebuffed due to confusion about its complex structure.

However, most of the IPO shares are reserved for institutional investors and ultra-high-net-worth individuals. Because the shares will list in New York, Australian retail investors will not be able to hold them directly.

For Australians not willing to make a detour via an international equity fund, there are alternative ways to get involved: punting on the opening price or initial market capitalisation ("spread betting") and through contracts of difference (CFDs) – financial derivatives that allow traders to speculate on share price movements without the need for ownership of the underlying shares.

Both investment tactics are engineered to ride the volatility and the profit from a rapidly rising speculative rush that come with much-hyped floats. Both come with significant risks and are better suited to experienced investors, shareholder activists warn.

If properly understood, the risks could be managed, said Evan Lucas, an analyst at IG, which is offering both options.

"It's just another way of investing," Mr Lucas said. "Not everyone likes short-term trading and investment, but this does give you access to markets you wouldn't have otherwise."

IG said it had experienced an influx of investors in the past few weeks who were willing to put money on the possibility that Alibaba was slightly undervalued because the average valuation in the grey market was $203 billion, about $30 billion above analysts' expectations.

"The word on the street is Alibaba's valuation is low, with a plan to sell it cheap at first so they can really ramp it up," Mr Lucas said. "This is the opposite of Facebook, which had a disappointing IPO."

Greg Smith, head of research at financial consulting group Fat Prophets, said investors needed to do their research.

"It's not a guaranteed success when it comes to IPO," Mr Smith said. "It's important not to get too caught up in the hype, especially if you're relying on leveraged exposure.

"IPOs can be used to make a quick buck, but there are no guarantees to that strategy. We hear the successes, but there is an equal and even greater amount of failures."

Outgoing director of the Australian Shareholders' Association (ASA), Stephen Mayne, said taking a position on an opening-day price was more gambling than investing.

"There would be very few professional Australian investors who would place bets on where the IPO would finish on day one," Mr Mayne said. "The history of floats like this is they spike on open and there are risks that Alibaba is getting overdone."

Once the first day closes, investors can continue their investment if they choose by converting the lots into CFDs, a highly leveraged product that is traded at a rate that mirrors the market.

"CFDs mean a larger upside, but also a larger downside," Mr Lucas said.

Mr Mayne said ASA discouraged investors from CFDs because they were high-risk and unregulated.

"They certainly elevate risk and you can be wiped out quite easily," Mr Mayne said. "It's for sophisticated investors with a much larger appetite for risk than your normal mum-and-dad investors."

He said investors should instead look to exchange trading funds and international fund managers such as Platinum Asset Management or Magellan.

Mr Smith added that one of the safest routes to getting involved in the Alibaba float would be to invest in major existing shareholders.

Both Yahoo, which owns 24 per cent of Alibaba, and SoftBank, owner of 34 per cent, are already accessible and offer a diversified approach to backing Alibaba with their other businesses.