QuantumScape Stock Presents an Opportunity for a Fully Covered Collar Game

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It is motorized higher and skidded lower. Welcome to the scholarship and fate of QuantumScape (NYSE:QS) Inventory.

Source: Michael Vi / Shutterstock.com

As I’ll explain below, if you want to end up as something better than a crash test dummy in stock QS, looping with an active collar strategy remains the vehicle of choice.

If you own QuantumScape, you’ve probably had a hard time lately. With the return in vogue in the first half of this year of high multi-risk trading, there are plenty of people and tickers up to speed.

There’s probably no better vehicle to realize this pain than the hotter than hot ETF funds of 2020 from Ark Invest (NYSEARC:ARKK) and his frank but today, only human, Cathy Wood.

Among the varied damage in the leaders of tomorrow are names such as Teladoc (NYSE:TDOC), Cloudy (NYSE:REPORT) Where Matterport (NASDAQ:MTTR). The next-generation QuantumScape battery is right there with them.

Just when some QS stock investors may have believed that Biden’s infrastructure bill and its emphasis on electric vehicles and all things green was the final straw for those more pessimistic bears, This was not the case.

A fuel-injected explosion of 80% in just over two weeks in mid-November completely collapsed.

A Closer Look at QS Actions

Today, QS stock has completely reversed the rally from around $24 to $43 returning squarely to its starting line at the end of October. It is trading today at around $24.30.

Naturally, this happened amid another wave of bearish sentiment directed towards growth stocks.

With its pre-sales, concept-stage ambitions to take electric vehicles to the next level with its as-yet-unproven multi-layered solid-state technology, there is obvious cause for concern.

But QS also asks investors to be patient, and today’s perception makes that more problematic.

Is 2024 or even 2025 too long to wait? This is what QuantumScape demands. Moreover, it is if the company succeeds in deploying a battery of work in partnership volkswagen (OTCMKTS:VWAGY) EV.

Bottom line, it’s no surprise that QS stocks are less compelling for bulls.

Still, that’s not to say QuantumScape isn’t a compelling vehicle to own.

QS Stock Weekly Price Chart

QuantumScape (<a href=QS

Source: https://www.tradingview.com/

Volatility is a two-way street. As for QS stocks, stocks continue to zigzag.

The last trading weeks and the changes in trading weeks depicted in the chart in which QuantumScape turned around are proof enough of this.

As our QS lifetime chart shows, this barely scratches the surface with a similar but much larger flip-flop ranging from $11.25 to $132.73 and almost all the way down.

Keeping that in mind, today and on the price chart, the observation is that volatility in QS stock has put it one more time in a sufficiently attractive position for investors to consider trade a fully hedged collar on stocks.

The collar is the synthetic equivalent of a bullish call spread, but it can be more than just a bid and hope until expiration.

The point is that by owning the underlying investors, they can adjust strikes over time during bullish and bearish phases. This can result in highly profitable adjustments that lead to superior risk-adjusted results in a volatile stock like QS.

As of the date of publication, Chris Tyler holds hedged long positions (directly or indirectly) in Ark Innovation ETF (ARKK) and Ark Genomics Revolution ETF (ARKG). The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Chris Tyler is a former ground derivatives market maker on the US and Pacific exchanges. For additional market insights and related thoughts, follow Chris on Twitter @CAT_Options and StockTwits.

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

Elizabeth J. Harless