Unusual Options Activity: QuantumScape (QS)

Shares of experimental battery maker QuantumScape (QS) have surged higher in recent sessions. While the move may just be part of a trend of retail investor favorites moving higher, one trader sees the opportunity for shares to jump much higher in the coming weeks.

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  • That’s based on the June 25th $40 calls. With 18 days on the clock, over 7,040 contracts traded against an open interest of 329 contracts, for a 21-fold rise in volume.

    The buyer of the calls paid about $0.64 to make the trade. With shares around $30 at the time they were bought, they would need to rally another 33 percent or so for the option to move in-the-money. That’s still a far cry from the company’s 52-week high of nearly $133 per share.

    QuantumScape was one of many electric vehicle companies that have gone public in the past year. The company is working on next-generation battery technology. While it’s had a breakthrough, there’s still a long way to go before the batteries will appear in commercial vehicles.

    Action to take: It’s a good bet on a rebound in one of many popular trades among retail investors. At a price under $1.00, the option could potentially provide triple-digit returns, although it could just as easily drop to zero.

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  • Traders may want to take the plunge, but either look for a quick profit or get out quickly if shares stop moving higher.

     

    Disclosure: The author of this article has a position in the stock mentioned here, and may make additional trades in this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.