---
title: "Holding a long position in LI (Li Auto), how to put brakes on this \"contradiction\" in the next month"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/40093155.md"
description: "Suppose you are holding a long position in $Li Auto(LI.US) shares. The question now is not "can it still go up?"—it's "this company has both a +20% sales target + $1 billion buyback, and Q1 guidance revenue is expected to drop another 16-21% YoY. With both these things on the table, how should I hedge next month?" 1. Industry Risk Exposure LI is not a pure "growth stock" nor a pure "value stock"; it's a typical "transitional stock"—sales of existing products have peaked and are declining..."
datetime: "2026-04-22T09:38:04.000Z"
locales:
  - [en](https://longbridge.com/en/topics/40093155.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/40093155.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/40093155.md)
author: "[椿](https://longbridge.com/en/profiles/27514736.md)"
---

# Holding a long position in LI (Li Auto), how to put brakes on this "contradiction" in the next month

Assume you are holding a long position in $Li Auto(LI.US) common stock. The question now is not "can it still go up?"—it's "this company has a +20% sales target + a $1 billion buyback on one hand, and Q1 guidance forecasting a further 16-21% YoY revenue drop on the other. With these two things on the table at the same time, how should I hedge next month?"

**I. Industry Risk Exposure**

LI is neither a pure "growth stock" nor a pure "value stock"; it's a typical "transitional stock"—sales of existing models have peaked and are declining, while new products (new L9, pure-electric MEGA series) have yet to generate incremental growth. Key industry sensitivity dimensions:

-   **Intense Competition in China's EV Market**: Xiaomi SU7, Huawei Aito, Nio, XPeng—each is grabbing market share from LI's extended-range SUVs.
-   **Political Risk for US ADRs**: US-China audit agreements, delisting rumors, tariff news—each can knock LI down 10%.
-   **Chinese Consumer Confidence**: Li Auto's family SUV positioning directly targets middle-class purchasing power, making sales vulnerable during real estate/stock market downturns.
-   **Can the New Models Deliver?**: The Q2 launch of the new L9 is a turning point; missing it could trigger a second wave of selling.

**II. Catalyst Calendar for the Next Month**

-   Mid-to-late April: LI Q1 2026 earnings report (exact date TBA, guidance already indicates -16% to -21% YoY).
-   Early May: April delivery data release (1st-3rd of each month).
-   Mid-May: Competitor (XPeng, Nio) earnings windows—sector sentiment linkage.
-   Q2 (Expected May-June): New L9 launch event + pre-order data.
-   Ongoing: Monthly windows for changes in China's central bank LPR / consumer stimulus policies.

**Largest Risk Window**: **The overlap of Q1 earnings and April delivery data**. Q1 already has poor guidance, but the market cares about "just how bad it is, whether guidance is revised, and the L9 timeline"—any miss could lead to a -15%+ drop.

**III. Hedge Instrument Selection**

**Option A: Put Protection (Most Direct)**

-   Buy LI 5/16 or 5/23 -5% OTM Puts (current price x 0.95).
-   Covers both Q1 earnings and April delivery data events.
-   Expected cost: ~2.5%-3% of position value (LI's IV is high, Puts are expensive).
-   Trigger: Payout begins if LI drops below -5%.

**Option B: Put Spread (Cost Reduction)**

-   Buy -5% OTM Put + Sell -15% OTM Put.
-   Expected cost: ~1.2%-1.5%.
-   Trigger: Linear payout between -5% and -15%.
-   Suitable if you judge "it will fall but not crash to 2023 lows."

**Option C: Collar (Most Recommended)**

-   Buy -5% OTM Put + Sell +8% OTM Call.
-   Expected cost: Near zero (sometimes even receive a small credit).
-   Cost: Upside capped if LI rises above +8%.
-   **Collar offers the best cost-benefit on a volatile, floor-supported stock like LI.**

**Option D: Reverse Hedge (Using Peer Shorts or Indices)**

-   Short NIO or XPEV peers (as a pair within a China EV portfolio).
-   Or short MCHI / KWEB (China equity ETFs).
-   Expected cost: Borrowing cost + beta mismatch risk.
-   Not recommended—LI's stock-specific alpha outweighs its sector beta, a misaligned hedge could lead to losses on both sides.

**IV. Volatility Data & GEX Sentiment**

LI's current IV is around 60-70, IV Percentile estimated ≈55P (reference)—**neutral to high, likely to rise further before earnings**. This is bad for Put buyers (expensive premium) but good for the Collar structure (the sold leg is also expensive, offsetting cost).

In GEX distribution, **$25 is a Put Wall** (previous key support), **$30 is a Call magnet**. This implies: short-term, LI is likely to oscillate within the $25-$30 range, unless an event breaks through these boundaries.

**V. BSM Valuation & Convexity Advice**

In the DTE30 option chain:

-   **Near-month Puts have high negative convexity**—Puts accelerate in value when the stock price falls.
-   **Near-month Calls have high positive convexity**—Calls accelerate in value when the stock price rises.
-   **Collar structure's convexity is near neutral**—benefits from both sides.

**Recommended Trade**:

**Core Plan**: Option C · Collar · Expiry 5/23 · Put $26 + Call $31 (assuming current price ≈$27.5).

-   Covers Q1 earnings + April delivery data.
-   Near-zero cost.
-   Preserves 10%+ upside + 5% downside protection.

**Alternative Plan**: If firmly bullish on post-Q2 L9 launch elasticity, move the Call leg to $35 expiring 6/20, leaving more upside room, but paying a small net debit.

**Not Recommended**:

-   Holding a naked long position without hedging—having poor Q1 guidance in hand, not protecting is gambling.
-   Exiting the position entirely—2026 +20% target + L9 catalyst + $1B buyback + $8.11B cash provide downside elasticity.
-   Inverse ETFs like QID—correlation with LI is too weak, hedging efficiency is low.

**Final Word**: LI is currently a contradictory entity with four things hanging simultaneously: "weakening fundamentals + cheap options + buyback support + new model pending." **Not hedging is gambling on luck, exiting entirely is giving up Q2 elasticity—the Collar is the structure that doesn't abandon either side.**

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## Comments (3)

- **弧光 · 2026-04-22T20:03:39.000Z**: Very comprehensive, may I ask which company's AI is this? Is it possible to share the prompt for learning? (´▽｀)
- **网兔 · 2026-04-22T16:40:18.000Z**: What