NIO coiled to test $12+ again?

In the final week of January, NIO (NIO) announced the offering of $650 million convertible five-year bond to raise funds and utilize the funds “to pay the costs of the capped call transactions.” The bond offering closed on February 4. Tencent Holdings (TCEHY) purchased $30 million worth of its proposed offering, while Hillhouse Capital Management purchased $5 million of its proposed offering. Existing large investors’ continued confidence in NIO drove its stock higher in the next few sessions.

Key factors in February that caused NIO to rise over 20% include:

• On February 20, NIO pleased investors by stating that it has been ranked fifth on Fast Company’s list of China’s most innovative companies for 2019.
  
• On February 24, CBS broadcasted an interview with William Li—NIO’s founder and CEO. During the interview, Li tried to project NIO as a lifestyle company—different from Tesla (TSLA). These factors likely boosted investors’ sentiments in last month.
  
• TSLA 's CEO, Elon Musk, was held in contempt of court for his Twitter behavior and continues to put the company in hot water with the SEC: www.cnn.com/2019/02/...-contempt/index.html
  
• Productive USA-China talks to reach a trade deal.
  

With that said, I believe the risk:reward is there on either April $8 or $10 calls to hold over earnings for possible move back up towards the all-time high. Max risk will be defined ahead of times so no stop loss will be needed.

We will float an order out there for April $10 calls at $1. IF it does not fill by market close tomorrow, I will adjust the order to get filled ahead of earnings.

Trade active:

Filled at $1 on the $10 calls.

Comment:

And that's why you define your risk with options ;-).