First, let's look at the expected numbers. Wall Street analysts expect the bottom line to come in at a loss of 81 cents per share on revenue of $1.26 billion. In the year-ago quarter, Rivian posted a loss per share of 46 cents on revenue of $1.73 billion. These figures beat the consensus targets of a 65-cent loss and $1.43 billion, respectively.
Generally, after a shaky period between early 2022 and early 2023, where Rivian only beat on revenue once in five reports, the EV maker has significantly improved its top-line performance relative to analysts' expectations. Investors will be hoping for more of the same, especially amid a challenging economic backdrop. If volatility skew is any indication, the smart money appears to be anticipating at least the possibility of upside in RIVN stock.
Volatility skew is a screener that identifies implied volatility (IV), a stock's potential kinetic output, across the entire strike price spectrum of a given options chain. For the Feb. 13 weekly chain (which expires one day after earnings), the skew shows a clear prioritization of upside convexity.
On certain strikes above the spot price, call IV noticeably stands above put IV. For most of the above-spot strikes, put IV is modestly above call IV, which is what you would normally expect ahead of earnings for a name like RIVN stock: this is basically protection against a downturn. However, the selective call IV dominance potentially indicates belief in upside capability.
Combined with the deep in-the-money (ITM) calls, where call IV is clearly above put IV, the overall posture prioritizes bullish expression, with some hedging to the downside.
Establishing The Trading Parameters Of RIVN Stock
While we now have a general understanding of the possible sentiment of the smart money, we don't know how this may actually translate into price outcomes. For that, ...
