How you could have traded Rivian, RIVN unusual options activity beforehand!
As part of our free weekly educational series
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In today’s issue, we’re going to cover unusual options activity on numerous strikes that hit the tape prior to a significant news release announcing a joint venture between Volkswagen and Rivian Automotive, Inc. $RIVN. Hopefully this will assist you in recognizing unusual activity!
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After the market closed on June 25th, the world’s second largest car maker Volkswagen and Rivian $RIVN announced a joint venture. As part of this agreement, Volkswagen is to invest $5 billion in Rivian, and the two companies will collaborate on software for electric vehicles. The Options market seems to insinuate that someone may have known this news was coming.
Notable flow on $RIVN was spotted on the morning of June 25th, when 4,051 contracts of the $RIVN $14C 6/27/2024 hit the tape at the ask price of $0.05 per contract. This was unusual, as $RIVN traded at only $12 per share when these orders came in, placing the contract at 19% out of the money. This was made more unusual by the fact that, at the time of the orders, the contract had just 3 days before expiry.
Just minutes later, another contract saw similar treatment. The $13C 6/28/2024 contract hit the tape at the ask price of $0.12 per contract while $RIVN traded at $11.99 per share. The $13C was 9% out of the money at the time of fill, again with just 3 days until expiry.
Users in the extended Unusual Whales discord community noticed these trades. One user noted them as unusual, and commented on the initial losses experienced by the contracts as $RIVN pulled back intraday after the orders were filled.
Although the most unusual activity we outlined hit the tape on June 25th, we noticed that the upside sentiment on $RIVN may have begun far sooner. Using the Unusual Whales Rivian Net Premium history, we can see that significant ask-side call premiums for $RIVN built up well before the 25th, as $RIVN call premiums remained positive for weeks.
Dating back to at least June 12th, 2024, $RIVN didn’t experience a single day with negative call premiums, OR positive put premiums. This shows us fairly clearly that the bullish sentiment in $RIVN predated the news of a joint venture between Rivian and Volkswagen. Once that news dropped, the reaction from $RIVN investors during after hours trading was instantaneous.
Before we get to the results of this flow, we are kicking off with an Unusual Whales
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Following the joint venture announcement, the Rivian $RIVN share price instantly jumped to the upside. Within minutes, the $RIVN share price had risen from $11.91 to as high as $18.90 per share; a nearly 59% move.
On the morning of June 26th, the traders who, “innocently and luckily”, I’m sure, saw a massive gain on their contracts.
Both the $13C and the $14C 6/28/2024, as you recall were nearly 10% and 20% out of the money just the day prior, found themselves deep in the money by market open.
Here are the results:
$13C 6/28/2024 | $0.12 → $3.85 | +3,108%
$14C 6/28/2024 | $0.05 → $2.56 | +5,020%
The nature of this flow just one day before news, and the bullish activity that predated the announcement by weeks, is certainly eyebrow raising. What do you think? Lucky? Or knowledge? Either way, it’s Unusual.
Thank you as always for reading! Be on the lookout for more guides, walkthroughs, and Education on the Unusual Whales YouTube channel!
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NOTE: This post is not financial advice. The stock market is risky, and any trade or investment is expected to have some, or total, loss. Please do research before any trade. Do not use this information for investment decisions. Check terms on site for full terms. Agree to terms before considering this information.