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Easily one of the biggest movers on Friday was solid-state battery (SSB) technology specialist Microvast (MVST), which saw its equity gain almost 26%. To be fair, SSB ended up losing about 2% for the business week ending Jan. 10. Still, the question surrounds the forward viability of MVST stock thanks to a groundbreaking development.
Last Thursday morning, Microvast announced a major milestone, forwarding an SSB that eliminates the liquid electrolytes used in traditional batteries. Fundamentally, this innovation significantly improves safety, along with energy density (or the amount of energy stored per unit of weight or volume) and system efficiency. Naturally, such an advanced battery system can have serious implications for data center backups, electric vehicles and advanced robotics.
The architecture eliminating liquid electrolytes is significant because such a medium can be unstable at high voltages and thus pose safety risks. By replacing this element with a solid electrolyte, Microvast enhances functionality safely, even at much higher power deliveries. In addition, the company’s bipolar design connects layers within a single cell, enabling higher voltages without the external connections between cells.
Regarding next steps, Microvast is moving into the pilot production phase, where it will focus on scaling up manufacturing and addressing potential production challenges. Likely part of the reason why MVST stock shot up was that this move represents a significant step toward the commercialization of the underlying technology.
At the same time, Microvast stock is no longer the wildly discounted deal it once was in December. How then should investors approach this speculative but compelling name?
MVST Stock Lights Up the Unusual Options Screener
While quantum computing stocks have been all the rage these days, MVST stock arguably took the spotlight to close out the first complete week of 2025. Naturally, MVST also took its place in Barchart’s list of unusual stock options volume.
Following the ringing of the closing bell, total options volume for MVST stock hit 44,079 contracts against an open interest reading of 126,749 contracts. Friday’s volume represented a 200.27% lift over the trailing one-month average metric. Further, call volume greatly exceeded put volume by a count of 34,557 versus 9,522.
With a put/call volume ratio of 0.28, MVST stock seemingly carried bullish implications. Options flow data on Friday revealed the same, with net trade sentiment clocking in at $154,000. Overall, bearish options’ gross total dollar volume landed at $-173,600, whereas gross bullish volume hit $327,600.
Still, is this reason enough to consider a long wager on MVST stock? Frankly, the statistical data isn’t encouraging.
For the business week beginning Dec. 16, 2024, MVST posted a weekly return of 17.69%. For the last several weeks prior, shares had been on a stratospheric run. Therefore, it’s possible that at some point — perhaps some point soon — Microvast may encounter weakness as early investors lock in their profits (i.e. buy the rumor, sell the news).
What makes this prospect more likely in my opinion is the empirical data. Historically, whenever MVST stock posts a weekly return between 10% to 30%, there’s only a 34.62% chance that by the end of the fourth subsequent week, the equity will land in positive territory. Stated differently, there could be a 65.38% chance that shares could fall by the close of this coming Friday (Jan. 17).
Further, the average loss during these negative responses comes out to 25.61%. Based on last Friday’s close of $2.35, there’s a risk of MVST stock slipping to $1.75. Coincidentally, this level aligns almost perfectly with a key support line, along with MVST’s 50-day moving average.
A Bear Put Spread for the Most Daring Gambler
Personally, the idea of investing long term in MVST stock is intriguing, there’s no doubt about it. However, like a good baseball manager, I respect the numbers. At the moment, the numbers don’t seem to be incentivizing taking a swing, at least from the bullish perspective.
For those who are true gamblers and don’t mind taking all-or-nothing wagers, a bear put spread for the options chain expiring this Friday may be a tempting proposition. Barchart identifies one transaction — the 2.50/2 bear put spread (or buy the $2.50 put and simultaneously sell the $2 put).
As of this writing, the debit paid (which is also the most that can be lost in the trade) is $35, for the chance to earn a maximum of $15. It’s an inefficient trade to be sure because the probability of profit is 39.3%, which is awfully low for such a small payout.
However, these odds are likely calculated stochastically and not dynamically as mentioned earlier. Under a dynamic pricing model, the probability of success arguably favors the bearish speculator, especially since the average return target is aiming for $1.75, not at the more generous $2.
