Lucid Group Options Explode, Increasing Total Volumes By More Than 60%

Lucid Group, Inc LCID is having an incredibly strong day, up over 6% to close the week on high volume with over 63 million shares traded. But the real kicker is in the options market, with traders moving over 794,000 contracts.

To put this in perspective, prior to the trading session, Lucid only had approximately 1.27 million total options. Hence, today's option activity represents a 61% increase in the volume of contracts, all in one day!

What Happened: Outside of any known catalyst, option traders have gorged on Lucid stock with a strong bullish bias, moving over 470,000 calls and 323,000 puts (image below).

This translates into 60% of all options today being calls, which is impressive considering the total volume of contracts.

Diving deeper into the large volume of contracts, over 408,000 of them are short dated (expiring today). This translates to roughly 51% of the options being short dated.

Why It Matters: Short dated options, especially 0 DTE (0 Days to Expiration) tend to be destabilizing because they disrupt the overall options board, and with their quick expiration, will create a large vacuum of options come Monday.

Since the largest majority of the flows today are bullish, this could lead to Lucid pulling back in the last hour or two of trading.

What's Next: Traders should anticipate volatility next week with so many options rolling off today. Hence option traders could play the volatility skew as one strategy. 

Regardless, looking at the next two expiries (Jan. 14, 21), there is solid open interest between the $35 and $45 strikes, which could offer support until the January monthly expiry (image below).

It should be noted there is solid open interest at the "moonshot" strke of $70, which is only priced in at a 1.54% chance of being hit. Hence, the flows here are likely retail buying deep OTM (out of the money) calls in hopes of hitting a winning punt.

Absent any new catalysts, this may be hard to achieve, but support could come in on pullbacks between the $35 and $30 strikes for another leg up.