No doubt about it, electric vehicle stocks have been hot.
Tesla Inc (TSLA) broke above $1,300 and became the world’s most valuable car company.
Of course, a lot of traders want to own TSLA for the potential move higher…
But with such an expensive price tag, some traders are forced to look elsewhere.
I mean take a look at some electric vehicle makers’ performances:
- Arcimoto Inc. (FUV) up more than 150% over the last month.
- Electrameccanica Vehicles Corp. (SOLO) more than tripled since June.
- Ayro Inc. (AYRO) is doubled over the last week.
- Nio Inc. (NIO) is more than 800% off 52-week lows.
I believe traders are looking to smaller electric vehicle companies to play the run higher.
Now, there can be a lot of noise in this space right now… and that’s why I turn to my “insider” activity scanner — which lets me know where the “smart money” is placing bets.
I’ve noticed a slew of bullish options activity on electric vehicle stock…
It was such a large bet that it signals to me this “smart money” trader has a high conviction on the name.
So what how did I spot this trade, and what am I watching?
Can NIO Break Above $16?
On Monday, I mentioned I noticed some “smart money” activity in NIO last week, and provided an update.
Now, NIO has tripled over the last three months, and it’s up more than 50% over the last week.
It’s one of the hottest stocks now, and more than 200K Robinhood traders hold this name.
Despite the stock being more than 800% off its 52-week lows, one options trader from betting it goes even higher.
Why do I say that?
Well around 11 AM ET on Monday, I noticed rather large and unusual options activity in NIO.
An options trader came in and bought 3983 NIO July $16 Calls.
They paid $0.90 per contract… and if you do the math, that means they spent more than $350K on the trade.
A big bet… especially since the stock was trading around the mid $11 area yesterday.
Why was this trade so interesting?
- Those options expire next Friday
- The trader needs the stock to rise by more than 40% just to break-even
- This is a brand new position
- The trader paid above the ask to secure they get filled on their entire position
I don’t know about you…
But whoever is throwing down a $350K+ bet must have high conviction… or may know something.
Who really knows.
Only time will tell if this options bet will pay off for this player.
Now, knowing information like this is very powerful in my opinion.
I believe it allows me to generate trade ideas and make them their own.
For example, if a trader is comfortable with only trading stock… they may look to buy shares after seeing that order.
If they’re conservative and know how to trade options, the may decide to sell puts in the symbol, buy deep in-the-money calls, or even do some sort of options spread.
It all depends on the trading style.
Whatever it is, I believe if traders learn how the smart money trades…
Then they can potentially steal their trade ideas and make them their own… and potentially generate gains.