Nio Options Traders Believe The Bottom Is In

Nio Inc NIO got a boost this week from New York Mellon Corporation’s U.S. investment bank. The bank purchased an additional 508,000 shares of the Chinese electric vehicle maker in the first quarter of 2021.

Nio's stock lost almost 54% of its value between Jan. 11 and May 13, but may have put in a new bottom near the $31 level and on Tuesday was working on its third green day in a row.

The beaten-down stock caught the eye of some options traders who believe there’s some serious upside over the next weeks and months with one trader believing Nio’s stock could make its way back towards the $50 level. Together these traders bet over $1.96 million Nio is geared up for a price recovery.

See Also: How to Buy Nio Stock Right Now

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

• At 10:11 a.m., Tuesday a trader executed a call sweep, above the ask, of 251 Nio options with a strike price of $50 expiring on Nov. 19. The trade represented a $49,698 bullish bet for which the trader paid $1.98 per option contract.
• At 10:29 a.m., a trader executed a call sweep, near the ask, of 300 Nio options with a strike price of $45 expiring on Feb. 18. The trade represented a $135,000 bullish bet for which the trader paid $4.50 per option contract.
• At 10:32 a.m., a trader executed a call sweep, near the ask, of 5024 Nio options with a strike price of $34 expiring on May 21. The trade represented a $492,352 bullish bet for which the trader paid 98 cents per option contract.
• At 10:36 a.m., a trader executed a call sweep, near the ask, of 300 Nio options with a strike price of $47 expiring on Jan. 27. The trade represented a $110,700 bullish bet for which the trader paid $3.69 per option contract.
• At 11:19 a.m., a trader executed a call sweep, near the ask, of 2087 Nio options with a strike price of $34 expiring on May 21. The trade represented a $250,440 bullish bet for which the trader paid $1.20 per option contract.
• At 11:27 a.m., a trader executed a call sweep, near the ask, of 1356 Nio options with a strike price of $29 expiring on May 21. The trade represented a $732,240 bullish bet for which the trader paid $5.40 per option contract.
• At 12:16 p.m., a trader executed a call sweep, above the ask, of 741 Nio options with a strike price of $34 expiring on May 21. The trade represented a $135,000 bullish bet for which the trader paid $1.20 per option contract.
• At 1:05 p.m., a trader executed a call sweep, near the ask, of 250 Nio options with a strike price of $50 expiring on Dec 17. The trade represented a $62,500 bullish bet for which the trader paid $2.50 per option contract.

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 option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call 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.

NIO Price Action: Shares of Nio closed up 1.1% at $34.19.