Lucid stock has started this week with its foot pressed down hard on the gas pedal, surging to a 9-month high on Tuesday. Lucid Group Inc (NASDAQ: LCID) reached an intra-day high of $47.87 on Tuesday before ending the session at $45.92 (+9.85%). The impressive performance follows a strong showing in October, which Lifted LCID almost 200% since September.
Several encouraging developments are driving the recent gains. Firstly, towards the end of last month, the EV-maker started delivering its premium Air Dream Sedan models to customers. Additionally, the Air Dream has a greater range than Tesla’s longest-range vehicle. Furthermore, a recently opened showroom and several positive reviews have revived interest in Lucid Stock.
The daily chart shows Lucid stock cleared trendline resistance at the end of last month. As a result, trading volume surged as newly-minted longs forced shorts to cover their positions. However, the price is approaching a key area of resistance.
The psychological $50 mark has a considerable number of call options contracts expiring on the 17th, which could dictate the action over the next week. If the price continues to gravitate towards the $50 strike price, shorts could be forced to buy Lucid stock to hedge their exposure, causing a gamma-driven melt-up towards the all-time high of $64.86.
However, the longer the price stays below $50 as we approach expiry, the odds of dealer hedges reduce. Therefore, the bulls must work fast to force an exaggerated upside extension. The chance of a gamma-squeeze is relatively high in the near term, and for that reason, I believe the price will go higher in the immediate future. However, a close below Mondays high of $41.92 suggests a reversal, invalidating the bullish call.
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This post was last modified on Nov 09, 2021, 10:46 GMT 10:46