September 21, 2023
Buy the Li Auto (LI) June 40 Calls (exp. 6/21/2024) for $8 or less.
The market is under pressure again today following the Federal Reserve event. We are going to take advantage of this weakness to buy the stock that has attracted the steadiest bullish option activity, Li Auto (LI), while selling two positions (FCX/SHOP) that are not working. Let’s dive in.
LI has seen wildly bullish option activity the past two weeks, including these trades:
Buyer of 2,000 Li Auto (LI) January 40 Calls for $4.25 – Stock at 38
Buyer of 7,000 Li Auto (LI) January 40 Calls (exp. 2025) for $10.40 – Stock at 38.5 (rolled down from the January 50 calls)
Buyer of 3,000 Li Auto (LI) June 30 Calls for $12.5 – Stock at 38.5 (rolled down from June 40 calls)
Buyer of 1,000 Li Auto (LI) May 55 Calls for $3 – Stock at 39
Buyer of 2,000 Li Auto (LI) June 32 Calls (exp. 2024) for $13.25 – Stock at 40.65
Buyer of 1,000 Li Auto (LI) January 40 Calls (exp. 2025) for $12.25 – Stock at 40.5
Buyer of 2,000 Li Auto (LI) June 35 Calls for $11.60 – Stock at 40.75
Buyer of 3,000 Li Auto (LI) June 35 Calls for $10.70 – Stock at 39.5
Buyer of 1,000 Li Auto (LI) January 40 Calls (exp. 2025) for $11.30 – Stock at 39.5.
Let’s get involved, targeting the June expiration cycle that splits the middle of sorts in terms of calls that have been bought by the hedge funds/institutions recently.
To execute this trade you need to:
Buy to Open the LI June 40 Calls.
The most you can lose on this trade is the premium paid, or $800 per call purchased.
The risks I see in this trade are simple: The market looks suspect, and China stocks look even worse. And for those reasons, there absolutely is risk.
That being said, I think LI looks mostly fine, this option activity is too strong for me to pass up, and without some risk there can’t be reward.
| Position (Original) | LI June 40 Calls |
| Position Strategy | Buy Call |
| Opened Date | September 21, 2023 |
| Expiration | June 21, 2024 |
| Net Price | 7.55 |
| Strike | 40 |
