NIO Surges to Fresh Records Following J.P. Morgan Bull Note

The equity has gained over 2,000% in the last nine months

Digital Content Manager
Jan 11, 2021 at 10:45 AM
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The shares of Nio Inc (NYSE:NIO) are trading at record levels this morning, up 10.6% at $65.15, after earlier touching an all-time high of $66.99. This surge comes after the Tesla (TSLA) rival received a price-target hike from J.P. Morgan Securities to $75 from $50. The firm noted several strategic milestones driving the bull note, including an in-house autonomous driving solution, a solid-state battery for the new ET7 sedan, and the content monetization and commercialization of LiDar. In simpler terms, the analyst in question believes the electric vehicle concern will continue to trade more like a "fast-growth" tech stock than a member of the auto sector. 

Prior to today's pop, the security had been cooling off from its late-November peak after a period of notching record-highs on a near monthly basis. Now, shares have broken through overhead pressure at the $55 mark, with support from the ascending 50-day moving average. In the last nine months, NIO has gained a jaw-dropping 2,081.9%. 

Analysts were hesitant towards the equity coming into today, leaving plenty of room for additional price-target hikes and/or upgrades, going forward. Of the seven in coverage, five carried a tepid "hold" rating. Plus, the 12-month consensus target price of $46.25 is a whopping 27.8% discount to current levels. 

A short squeeze could fuel additional tailwinds. Short interest rose 40.5% in the last two reporting periods, and the 83.70 million shares sold short make up 10.8% of the stock's available float. 

A shift is already happening in the options pits. Drilling down to today's activity, 612,000 calls have crossed the tape in just the first hour of trading, which is three times the intraday average. Most popular by far is the January 2021 70-strike call, followed by the 65-strike call in the same monthly series, with positions being opened at both. 

For those looking to speculate on Nio stock's next move with options, now seems like the ideal opportunity. The equity's Schaeffer's Volatility Index (SVI) of 104% sits in the 19th percentile of its annual range, meaning options players are pricing in low volatility expectations right now. Plus, NIO's Schaeffer's Volatility Scorecard  (SVS) sits at 89 out of 100, indicating it has tended to exceed option trader's volatility expectations over the past year -- a boon for option buyers.

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