Options Traders Pour into Bets on a Rally by the Global X Lithium & Battery Tech ETF


While the Global X Lithium & Battery Tech ETF (US:LIT) stated objective is to invest in companies that are involved in lithium, it also has invested in two large, prominent electric-vehicle makers — Tesla (US:TSLA) and China’s BYD (US:BYDDF) –along with Rivian (US:RIVN), a rapidly growing EV startup. 

The exchange-traded fund can make the case that Tesla and BYD manufacture batteries, but Rivian purchases its batteries from Samsung (KR:005930)

The lithium-ion battery market size in North America reached $16.0 billion in 2022, according to reseach from IMARC Group. The market is forecast to reach $31.6 billion by 2028, clocking a compound annual growth rate of 12.4% over 2023-2028.

Some of LIT stock’s put/call ratio data is quite bullish, while short selling accounts for a significant amount of the ETF’s daily trading volume, data compiled by Fintel shows. Further, several large institutions bought a significant number of LIT shares in the first quarter.

Bullish/Bearish Mix

Heading into the last week of the quarter, the overall Put/Call Ratio for LIT stock is 0.77, which is rather bullish. Hours before June 26 regular trading begins, the ETF ranks 1,922 out of 142,987 names for which Fintel provides the metric.

The Put/Call Ratio dashboard shows the total number of disclosed open put option positions divided by the number of open call options. Since puts are generally a bearish bet and calls are a bullish bet, put/call ratios greater than 1 indicate a bearish sentiment, and ratios less than one indicate a bullish sentiment.

For options that expire on July 21, however, LIT’s put/call ratio is a bearish 1.51. But the put/call ratio for its options that expire on Aug. 18 is a very upbeat 0.35, while those that expire on Oct. 20 are a less bullish, but still positive, 0.43. Finally, the put/call ratio for the options that expire on Jan. 19, 2024 is a very bullish 0.17. 

On June 22, a significant 30.6% of the total trading volume of LIT stock involved short selling. On June 20 and June 21, the same metric came in at 53.2% and 31.0%, respectively. 

Big Buyers

JPMorgan, one of the world’s largest banks, bought 38,839 shares of LIT in the first quarter, while UBS acquired 89,449 shares of the ETF in Q1. The Swiss bank, however, also picked up a put option on 81,100 shares on LIT, along with a call option on 44,600 shares.

Also adding to its stake in the ETF was Prudential Financial, which picked up 7,383 shares. Finally, Nomura, a large Japanese bank, acquired 26,200 shares of LIT. 

In the Mix

The Global X Lithium & Battery Tech ETF tracks Stuttgart Solactive AG Global Lithium gauge. The fund has an expense ratio of 0.75%.

Among the 41 current holdings, the fund’s biggest position is American lithium miner Albemarle (US:ALB), which accounts for 9.6% of its holdings. Tesla, at 6.5%, is in the second position, followed by Panasonic (JP:6752), at 5.8%. Investors should note that the huge Japanese battery maker manufactures batteries for Tesla.

Hong Kong-traded shares of BYD (HK:1211) are the ETF’s fourth-largest holding, at 5.43% followed by Japan’s TDK (JP: 6762). The latter company calls itself “a comprehensive electronic components manufacturer leading the world in magnetic technology.” TDK has two subsidiaries that make batteries, and it accounts for 5.28% of LIT’s holdings.

A huge Chinese battery maker, Contemporary Amperex Technology Co Ltd (CN:300750) is the ETF’s sixth largest holding, accounting for 4.52% of its portfolio, while Samsung’s lithium-ion battery subsidiary, Samsung SDI (KR:006400), is seventh with a 4.25% weighting.

The ADRs of Chilean miner Sociedad Quimica Y Minera de Chile (US:SQM) check in at the eighth position with a 3.68% weighting. Rivian is in the ninth position, constituting 3.67% of the ETF’s holdings. Rounding out the top 10, at 3.52% of the holdings, is Australian miner Pilbara Minerals (AU:PLS).

This story originally appeared on Fintel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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