Nio Shares Up Another 2% Pre-Market After Call Options Help Fuel Yesterday’s 23% Surge

Nio Shares Up Another 2% Pre-Market After Call Options Help Fuel Yesterday’s 23% Surge

Tyler Durden

Thu, 10/15/2020 – 09:01

Chinese EV maker NIO looks like the next candidate to become insanely overvalued with the help of an options market gamma squeeze. Shares of the electric vehicle company are up 1.7% already in Thursday’s pre-market session after a barrage of options trading helped the EV maker surge more than 20% in Wednesday’s session.

The fuse for Wednesday’s surge in shares came as a result of both JP Morgan upgrading the name and NIO seeing its options, specifically its $25 strike October calls, leading the most active among all U.S. contracts. By the afternoon, more than 80,000 October $25 calls had traded hands. 

On Thursday morning, open interest for the contract, and many other October calls, was above 20,000 contracts, despite there being less than 48 hours until expiration. 

No word on whether Masayoshi Son was seen anywhere nearby…

The question of whether or not the action in the stock – which now sports a market cap close to $33 billion despite delivering just 4,708 vehicles in September – had more to do with the upgrade, or the surge in the options market, remains to be seen. But it wouldn’t surprise us if NIO became the next candidate to “pull a Tesla”, now that Softbank showed the entire market knows that the gamma squeeze strategy works and isn’t going to be actively enforced against by regulators. 

Nio delivered just 10,331 vehicles in all of the second quarter 2020 and did $493.4 million in vehicles sales during the quarter. The company also did a massive capital raise earlier last month, selling 13,275,000 ADSs back in early September at a price of $17 per ADS. We ‘re sure those who participated in that raise aren’t complaining about the gamma squeeze either.

Go to Source
Author: Tyler Durden