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3 High-Potential Options Trades Ripe for the Electric Vehicle Boom

Rivian’s Rebound Potential

Driven by the escalating interest in electric vehicles, Rivian Automotive (NASDAQ:RIVN) is carving its niche in the competitive terrain, challenging heavyweights such as Tesla (NASDAQ:TSLA), Ford (NYSE:F), and General Motors (NYSE:GM). Despite a bumpy start to 2024, which saw a steep decline in RIVN shares, the company is gearing up to announce its fourth-quarter and full-year earnings and revenue. Expectations are high, with analysts projecting a significant improvement in per-share losses and revenues, setting the stage for a potential turnaround in fortunes.

Recognized as a “best idea” for the year 2024 by Baird, Rivian continues to grapple with demand-supply constraints that have outlasted many industry peers. This predicament, atypical for the EV segment, fortifies Baird’s forecast for a robust performance by Rivian throughout the year. With RIVN shares witnessing a 28% decline year-to-date (YTD), the stock is primed for a potential resurgence if the sentiment around the EV market improves, making it an enticing trade option for investors.

Nio’s Growth Prospects

A stalwart in the electric vehicle realm, the Chinese company Nio (NYSE:NIO) has undergone a downturn, with shares plummeting by 35.5% YTD. Despite grappling with concerns over escalating operating costs and stiff market competition, Nio is eyeing a promising outlook, driven by an optimistic sales volume projection and a substantial $2.2 billion investment infusion from Abu Dhabi’s CYVN Holdings.

The financial boost is set to assuage apprehensions about Nio’s liquidity position, while the unwavering support pledged by the Chinese government for its beleaguered stock market serves as an additional catalyst. Nio’s option open interest is also on the rise, indicating heightened demand for trading and holding options in the company. With the stock trading below $6, NIO could potentially surge back to above $10 a share, a level unseen since September 2023, thereby offering an attractive trading opportunity for investors betting on Nio’s resurgence.

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BYD’s Surpassing Triumph

Amid the burgeoning clout of China’s electric vehicle sector, BYD (OTCMKTS:BYDDF) captured global attention by outpacing Tesla as the world’s leading electric car manufacturer in the final quarter of 2023. This unparalleled feat underscores the rapid advancement and expanding influence of China’s EV industry, bolstered by a significant uptick in electric vehicle sales and an extraordinary 73% surge in overall sales from the prior year.

BYD’s monumental success, with the backing of prominent investor Warren Buffett, symbolizes the exponential growth of China’s EV market. Even though Tesla retains a lead over BYD in annual electric car sales, the substantial narrowing of the gap indicates BYD’s escalating prowess and underscores its potential as a major player in the electric vehicle domain.