How Will Nio Stock Will React To Q2 Earnings Print? Options Traders Are Mixed

Nio. Inc NIO is set to print its second-quarter results after the markets close on Wednesday. Although analysts expect the Chinese electric vehicle manufacturer to report an increase in revenues and smaller loss on earnings per share, Nio’s deliveries have slowed.

When a trader buys options to hold through a company’s earnings print, it’s a gamble. A stock can fall after the company posts and earnings beat or rise when a miss is reported. What’s perhaps worse is when the stock doesn’t react in a big enough way, which then burns the premiums and both bullish and bearish bets end up worthless for contracts that have a close expiry.

The implied volatility for options of Nio that expire this Friday is 7.03%, meaning that Nio’s stock will need to move either 7% higher or lower following its earning print for the contracts to move up in price. For bullish traders, this means Nio will need to trade over about the $46 mark on Thursday and for bearish traders below the $41 level.

This didn’t stop a number of institutions from buying both call and put contracts although most chose an expiry of Aug. 20 or later. Together the bullish options traders purchased over $482,998 worth of call contracts while the bearish traders bought $558,365 worth of puts.

See Also: How to Buy Nio Stock

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Bullish NIO Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:00 a.m., a trader executed a call sweep near the ask of 364 Nio options with a strike price of $50 expiring on Oct. 15. The trade represented a $91,000 bullish bet for which the trader paid $2.50 per option contract.
• At 11:11 a.m., a trader executed a call sweep near the ask of 300 Nio options with a strike price of $45 expiring on Sept. 3. The trade represented a $70,500 bullish bet for which the trader paid $2.35 per option contract.
• At 11:33 a.m., a trader executed a call sweep near the midpoint of 393 Nio options with a strike price of $43 expiring on Aug. 13. The trade represented a $71,919 bullish bet for which the trader paid $1.83 per option contract.
• At 11:33 a.m., a trader executed a call sweep near the ask of 467 Nio options with a strike price of $45 expiring on Aug. 13. The trade represented a $47,634 bullish bet for which the trader paid $1.02 per option contract.
• At 11:41 a.m., a trader executed a call sweep at the ask of 200 Nio options with a strike price of $44 expiring on Aug. 20. The trade represented a $27,200 bullish bet for which the trader paid $1.36 per option contract.
• At 11:41 a.m., a trader executed a call sweep near the ask of 379 Nio options with a strike price of $55 expiring on Jan. 21, 2022. The trade represented a $142,125 bullish bet for which the trader paid $3.75 per option contract.
• At 11:50 a.m., a trader executed a call sweep near the midpoint of 233 Nio options with a strike price of $45 expiring on Aug. 20. The trade represented a $32,620 bullish bet for which the trader paid $1.40 per option contract.

The Bearish NIO Trades: Below is a look at the notable options alerts.

• At 9:45 a.m., a trader executed a put sweep near the ask of 204 Nio options with a strike price of $43 expiring on Aug. 20. The trade represented a $32,028 bearish bet for which the trader paid $1.57 per option contract.
• At 11:16 a.m., a trader executed a put sweep near the ask of 400 Nio options with a strike price of $45 expiring on Aug. 20. The trade represented a $62,800 bearish bet for which the trader paid $3.05 per option contract.
• At 11:17 a.m., a trader executed a put sweep near the ask of 283 Nio options with a strike price of $40 expiring on Oct. 15. The trade represented a $83,202 bearish bet for which the trader paid $2.94 per option contract.
• At 11:33 a.m., a trader executed a put sweep above ask of 289 Nio options with a strike price of $46 expiring on Aug. 13. The trade represented a $91,035 bearish bet for which the trader paid $3.15 per option contract.
• At 11:34 a.m., a trader executed a put sweep near the ask of 200 Nio options with a strike price of $44 expiring on Aug. 13. The trade represented a $37,600 bearish bet for which the trader paid $1.88 per option contract.
• At 11:45 a.m., a trader executed a put sweep near the ask of 586 Nio options with a strike price of $30 expiring on June 17, 2022. The trade represented a $205,100 bearish bet for which the trader paid $3.50 per option contract.
• At 12:07 p.m., a trader executed a put sweep near the ask of 200 Nio options with a strike price of $44 expiring on Aug. 20. The trade represented a $46,600 bearish bet for which the trader paid $2.33 per option contract.

NIO Price Action: Nio was down 0.4% at $44.06.