NKLA Extends Losses After Partnership Termination

The equity sports attractively priced options at the moment

Deputy Editor
Dec 24, 2020 at 10:12 AM
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The shares of Nikola Corporation (NASDAQ:NKLA) are extending yesterday's plunge to their pre-pandemic lows, after the company and Republic Services (RSG) terminated a partnership to develop electric garbage trucks. According to a letter from Nikola's CEO Mark Russell, the move was "the right decision for both companies given the recourses and investments required." As a result, NKLA was last seen down 2.7% to trade at $14.62 this morning.

Things were looking promising for the equity near the end of November when shares were staging a climb back toward their summer highs, which culminated in a three-month peak of $37.95. However, a Nov. 30 bear gap lead Nikola stock below the $20 which has joined the 10-day moving average as a dual ceiling for the equity. While the security is down 26.5% this quarter, it's still up 45.8% in 2020.

Over the last 10 days, calls and puts have been trading at a relatively similar pace. In fact, 48,199 calls and 41,335 puts have crossed the tape in the last two weeks. That being said, traders looking to speculate on Nikola stock's near-term trajectory should consider options. The security's Schaeffer's Volatility Index (SVI) of 111% sits in the 10th percentile of its annual range, suggesting short-term options are pricing in low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.


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