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Swing Trade Idea (LI) – June 08, 2022

Our bearish trade for Wednesday, June 8th is Li Auto Inc. (LI). LI is part of the Consumer Discretionary sector, which has performed at -2.53% over the last month.

LI recently rallied into a key resistance level of $30, where it is currently in an overbought condition. As this is a counter-trend trade, we expect this level to hold as resistance and possibly retrace lower, which provides a good risk/reward bearish entry. 

As a close, if LI were to trade above $30 for multiple days, this would invalidate our analysis and consideration, cutting losses on the trade. We also consider cutting losses on this options trade if the value of the vertical spread moves above $0.88.