Bullish option trade on Rivian

Shares of electric truck maker Rivian (RIVN) deputed on the US stock market in November 2021 around $100/share before blasting off to $179 within a week. Since that time just four months ago, shares have been under massive pressure dropping in a steady descent to under $34/share shedding 81% of it's market cap. Normally such performance would bode poorly for a newly minted IPO, however we see something different here.

Production has been ramping up as Rivian has delivered just under 1,000 vehicles to date. The company has a lot to work out with supply chain miscalculations, part shortages, and leadership to drive the company. At the current share price of $33.96/share, the company has significant upside as these challenges get addressed. We expect the company to continue to work through its headwinds, and headlines will also likely be negative during this period. However, any increase in the production ramp will be a positive catalyst for the stock, and at the current rate of building and delivering just under 3 cars/day it's highly probable that deliveries will only get better even before the company builds its second manufacturing plant.

https://insideevs.com/news/559907/rivian-production-delivery-numbers-2021/

In the short term the stock has risks to overcome, but with Amazon and Ford providing orders and investment capital Rivian has a strong backstop with deep pockets on top of the ample liquidity and cash the company has on hand. Overlook the short term risks and get into this stock through a long-term option trade.

We are selling the January 2024 $25 Puts for $9.30, and buying the same expiration $40 Calls for $14.00 for a next cost of $4.70 on this trade. If shares trade below $15.70/share we could be forced to buy shares at that effective price, and if shares trade higher then both options are profitable. Since we have almost 2 years until expiration this trade has room for plenty of gains relative to the cost of putting this trade on.

There isn't a lot of strong financial analysis on the company available yet, but this articles gives you a good summary of the current situation:

Rivian Stock Has Become A Bargain (NASDAQ:RIVN) Rivian Automotive has seen its stock valuation collapse in recent months. See why we believe RIVN stock now looks attractively priced. SeekingAlpha