Rivian options buyers may be helping drive stock higher

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – Investors are piling into bullish options bets on the shares of Rivian Automotive, with some market participants saying the buying has helped the electric vehicle (EV) maker’s stock notch a record nine-day winning streak.

Rivian shares, which took off last week after the company reported better-than-expected quarterly vehicle deliveries, have risen 83% over the last eight trading sessions. Some 831,000 Rivian options contracts traded on Monday, or two times its average daily volume.

Much of the options trading has consisted of investors buying “super short-dated calls,” said Daniel Kirsch, head of options at Piper Sandler, adding that the options activity had helped drive Rivian’s shares higher.

Large purchases of out-of-the-money call options – contracts that are not profitable but stand to gain in value as the stock climbs – can sometimes give an additional lift to a stock’s price.

Such a phenomenon – sometimes called a gamma squeeze – occurs when market makers who sold the call options hedge their risk by buying the underlying stock, helping push the share price higher as a result. The phenomenon has occurred with shares of various companies popular with options buyers over the last few years, from AMC to Tesla (NASDAQ:).

“It reminds me a lot of what people would do with Tesla when it was going up every day … buying the shortest dated out-of-the money calls and trying to get it to ramp higher,” Kirsch said, noting that Rivian’s options trading was driven by a mix of retail and institutional players.

Rivian was the third most heavily traded individual company in the U.S. options market on Monday, behind much larger companies Tesla and Apple Inc (NASDAQ:), with about 42% of the trading volume in contracts set to expire on Friday.

Options on another EV name, Nio (NYSE:) Inc, were also actively traded on Monday, making it the 10th most heavily traded individual company in the options market.