Why Options Traders Are Targeting This EV Stock

Nio unveiled a new luxury sedan

Deputy Editor
Dec 26, 2023 at 12:21 PM
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China-based electric vehicle (EV) manufacturer Nio Inc (NYSE:NIO) is one of the best performing stocks on the New York Stock Exchange (NYSE) today. At last check, NIO is 9.4% higher at $9.21, following the unveiling of its newest four-set ET9 EV, a flagship sedan that is planned to rival the likes of Porsche and Mercedes-Benz with an estimated starting price of $112,000. 

Options traders are taking notice of the Tesla (TSLA) competitor's announcement. Already today, 351,000 calls and 57,000 puts have crossed the tape, which is three times the average intraday amount. New positions are being bought-to-open at the top three most popular contracts, led by the weekly 12/9 9.50-strike call. 

Calls were already the popular choice of late, per Nio stock's 50-day call/put volume ratio of 5.13 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 100% of readings from the past year, suggesting calls are being picked up at their fastest clip compared to the last 12 months.

These traders picked an opportune time to speculate on NIO with options, as premiums can be had for a bargain at the moment. The equity's Schaeffer's Volatility Index (SVI) of 67% is higher than just 17% of readings from the last 12 months, indicating that the options market is pricing in relatively low volatility expectations right now.

On the charts, the security recently bounced back above its 80-day moving average that stood overhead since early September. Nio stock is still trading well below its Aug. 4 annual high of $16.18, however, as it looks to overcome a 5.2% year-to-date deficit before the year closes out at the end of the week.

NIO Chart December 262023


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