To The Moon

$XPeng Inc.(XPEV)$ stock gained about 8.56% on 14 Nov (yesterday) trading after they announced that they will be presenting its first flagship MPV model, the XPENG X9, built under the next-generation Smart EV architecture SEPA2.0, at Auto Guangzhou 2023 on 17 Nov (Friday).

They have also showed significant improvement in sales numbers from September to October.

I believe XPeng has the potential for more upside after its upcoming results. I will be sharing on the Debit Call spread option trading strategy for XPeng.

XPeng Inc (XPEV) IV Percentile Rank

XPEV implied volatility (IV) is 73.5, which is in the 40% percentile rank.

This means that 40% of the time the IV was lower in the last year than the current level. The current IV (73.5) is -3.3% below its 20 day moving average (76.0) indicating implied volatility is trending lower.

XPeng Inc (XPEV) IV vs 20-Day HV

The current IV (73.5) in XPEV is 1.9% above its 20 day HV (72.1) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.

XPeng Inc (XPEV) Debit Call Spread: 30-Day Maturity, ATM to +5%

XPEV Call Spread Benchmark Index (30-Day Maturity, ATM to +5%) is unchanged today at 2.1% premium to stock price. This value is above its 52-week average premium of 2.0%.

The XPEV Call Spread Benchmark Index is designed to track the theoretical cost of buying an at-the-money call and selling an out-of-the-money call 5% above the spot price for options with 30 days to maturity.

Debit Call Spread Strategy On 15 Dec 2023 Contract

XPeng last close price as of 14 Nov 2023 is $17.00, I will be using this contract that expiration date is 32 days away on 15 Dec 2023, I will make one leg to buy a call on the $17 strike for $1.50.

I will add another leg - sell a call at $18 strike for $1.02.

The initial cost of the Debit Call strategy would be $0.48 ($1.50-$1.02). In order for me to make a profit from this strategy, the stock price would need to move higher than $17.48, which is calculated from long strike ($17) plus cost of the spread ($0.48).

My maximum gain would be realized if the stock moves above the $18 strike. Hence, my call spread would be worth $1 and my cost was $0.48. This will net me a profit of $0.52.

Summary

I would be expecting XPeng to trade higher today after its earnings release when market open as they have good deliveries and sales numbers for September and October.

I would think Debit Call strategy should be appropriate to take advantage of any upside movement for XPeng share price.

Appreciate if you could share your thoughts in the comment section whether you think XPeng could continue the upside today (15 Nov) after its earnings result release.

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.