Li Auto's 7.12% Intraday Surge: A Breakout Play Amid EV Sector Turbulence?

Summary
• Li Auto (LI) surges 7.12% to $31.495, trading near its 52-week high of $33.12
• UBS reaffirms 'Buy' rating, citing the July 29 i8 launch as a catalyst
• Options frenzy at $31 strike levels hints at aggressive short-term positioning

Li Auto's 7.12% intraday rally has ignited a firestorm of speculation in a sector grappling with UAW strikes and Tesla's manufacturing breakthroughs. With the stock trading above both its 30-day and 200-day moving averages and options traders amping up activity around $31 strike prices, the question is no longer whether Li Auto can sustain its momentum—but whether it can capitalize on a fractured automotive landscape. The i8's pre-order success and UBS's bullish stance provide a compelling narrative, but sector headwinds and Tesla's 0.18% dip underscore the volatile environment.

UBS Rating and i8 Pre-Order Momentum Drive Li Auto's Rally
Li Auto's 7.12% surge is directly tied to UBS's reaffirmed 'Buy' rating and the explosive pre-order success of its i8 model. The bank highlighted the i8's July 29 launch as a critical catalyst, with over 24,000 pre-orders placed within five hours. This aligns with Morgan Stanley's view that the i8's pricing (350,000-400,000 yuan) is in line with expectations and could drive 5,000 monthly units at steady state. The stock's proximity to its 52-week high and its 13.3% premium to the 200-day moving average further underscore the technical bullishness, supported by options traders amplifying volatility through high-volume call options at $31 strike levels.

EV Sector Splits as Li Auto Rises, Tesla Dips
While Li Auto gains 7.12%, Tesla (TSLA) declines 0.18% as investors weigh its manufacturing advancements against broader sector uncertainty. The UAW strike on Ford, GM, and Stellantis has created a vacuum in traditional ICE production, potentially diverting capital to EV-first players like Li Auto. Rivian and Lucid remain stagnant, highlighting the sector's fragmented recovery. Li Auto's hybrid model and battery technology position it as a middle-ground beneficiary in this polarized environment, contrasting with Tesla's pure-play EV strategy and the UAW's labor actions.

High-Leverage Call Options and ETFs for a Li Auto Breakout
• 200D MA: $25.73 (below); 30D MA: $27.98 (below); RSI: 61.48 (neutral); MACD: 0.181 (bullish); Bollinger Bands: $25.45–$29.39 (price above middle band)

Li Auto's technicals signal a high-probability continuation trade. The stock is trading 13.3% above its 200-day average and 6.6% above the 30-day average, with RSI in neutral territory. The 52-week high of $33.12 remains a critical resistance level. VanEck Low Carbon Energy ETF (SMOG) and Carbon Collective Climate Solutions U.S. Equity ETF (CCSO) offer leveraged exposure, with CCSO up 1.86% today. Aggressive bulls should target the $31.325 intraday high as a pivot point. A break above this level could trigger a 5.7% move to $33.00.

Top Option 1: LI20250725C31
• Code: LI20250725C31
• Type: Call
• Strike: $31
• Expiry: 2025-07-25
• IV: 48.47% (moderate)
• Leverage: 26.20% (high)
• Delta: 0.593 (moderate sensitivity)
• Theta: -0.138 (rapid decay)
• Gamma: 0.162 (strong price sensitivity)
• Turnover: 17,951 (high liquidity)
• IV: Implied volatility suggests market expectations of price movement
• Leverage: Amplifies returns relative to the underlying stock
• Delta: Moderate sensitivity to price changes
• Theta: Daily decay of option value
• Gamma: Accelerated sensitivity to price swings
• Turnover: High liquidity ensures smooth entry/exit
Why this contract stands out: LI20250725C31 offers a balanced mix of leverage (26.20%) and gamma (0.162), making it ideal for a breakout above $31.325. A 5% upside to $33.07 would yield a 27% gain on this contract. Its moderate IV and high turnover ensure sufficient liquidity for aggressive traders.

Top Option 2: LI20250725C31.5
• Code: LI20250725C31.5
• Type: Call
• Strike: $31.5
• Expiry: 2025-07-25
• IV: 47.47% (moderate)
• Leverage: 34.17% (high)
• Delta: 0.5097 (moderate sensitivity)
• Theta: -0.1268 (rapid decay)
• Gamma: 0.1702 (strong price sensitivity)
• Turnover: 2,705 (moderate liquidity)
• IV: Reflects market's volatility forecast
• Leverage: High amplification of returns
• Delta: Moderate sensitivity to price changes
• Theta: Daily value erosion
• Gamma: Strong response to price swings
• Turnover: Sufficient for active trading
Why this contract stands out: LI20250725C31.5 provides higher leverage (34.17%) and gamma (0.1702), ideal for a 5% upside to $33.07. While its turnover is lower than LI20250725C31, its high IV and gamma make it a compelling choice for aggressive traders seeking maximum exposure. A 5% move would yield a 36% gain on this contract.

Action Alert: Aggressive bulls should deploy LI20250725C31 for leveraged exposure, while conservative players should wait for a pullback to $30.755 before initiating longs. If $31.325 breaks, LI20250725C31.5 offers short-side potential.

Backtest Li Auto Stock Performance
The backtest of LI's performance after an intraday surge of 7% shows a strategy return of 72.58%, with a benchmark return of 83.41% and an excess return of -10.83%. The strategy has a CAGR of 11.68% and a maximum drawdown of 0.00%, indicating a stable but conservative performance following the surge.

Seize the Li Auto Breakout Before 7/25 Expiry
Li Auto's 7.12% intraday surge signals a potential breakout phase, driven by sector volatility and the i8's pre-order success. The stock's proximity to its 52-week high and strong options positioning suggest a high-probability continuation trade. Investors should monitor the $31.325 level as a critical technical threshold—breaking this could validate a 5.7% move to $33.00. Meanwhile, Tesla (TSLA) remains a sector benchmark at -0.18% intraday, offering a barometer for risk appetite. Aggressive bulls are advised to deploy LI20250725C31 for leveraged exposure, while conservative players should wait for a pullback to $30.755 before initiating longs.