Sharp swings in EV shares draws frenzied options trading

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NEW YORK, Nov 17 (Businesshala) – Traders are gathering in options trades on electric-automakers attracted by sharp volatility in stocks of companies such as Tesla Inc., Rivian Automotive and Lucid Group.

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On Wednesday, Tesla (TSLA.O), Lucid (LCID.O) and Rivian (RIVN.O) rubbed shoulders with the likes of Apple Inc (AAPL.O) and Advanced among the six most actively traded options. Made three. Micro Devices (AMD.O)

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Huge option volumes come on the heels of big gains for the stocks of many of these companies. Shares of Rivian, which has just started selling vehicles and has little revenue to report, are up nearly 80% since its initial public offering last week; Lucid is up 20% this week. Blanc Czech company Gores Guggenheim (GGPI.O), which is striking a deal to take Swedish electric-car maker Polestar public, is up 17% for the week.

Tesla shares were up on Wednesday, while some other electric vehicle makers retreated.

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“It’s the topic of the week,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “It looks like they might be mired in a meme-stock type of frenzy.”

Lucid, Rivian and Gores Guggenheim were among the top 20 most actively traded names in the options market this week, according to data from Trade Alert.

The buoyancy of trading in stock options can increase the volatility in the underlying shares. However, it was not immediately clear what effect they have on electric vehicle makers’ stocks, Frederick said.

On Wednesday, sentiment in options for electric-automakers leaned towards bearish and defensive bets, according to data from Trade Alert.

Lucid says that against shares falling below $50 as of Friday were among the company’s most actively traded contracts.

Puts give the right to sell shares at a certain price in the future and are often used to protect against a drop in the share price.

Rivian shares declined 17.0% on Wednesday to $142.7, Rivian also traded heavily at $150, $140, $130 levels.

Reporting by Saqib Iqbal Ahmed: Editing by Ira Iosbashvili and David Gregorio


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