Rivian Automotive (RIVN) stock surged in pre-market trading on Wednesday, gripping the electric vehicle (EV) investor community with a near 50% gain after German automaker Volkswagen announced it would invest up to $5 billion in the firm. The surge saw a trader turn around $16,000 into over $1 million in hours.

According to data shared by Unusual Whales, a single trader purchased a large number of $14 and $13 call options for RIVN, expiring on June 28. These options give the holder the right, but not the obligation, to buy Rivian stock at a set price by the expiration date. The timing of the trade has raised eyebrows, with some questioning whether the buyer possessed material non-public information about the company as the purchase came ahead of the Volkswagen’s investment announcement, which allowed the trader to turn their $16,000 bet on relatively cheap call options into over $1 million.

The pre-market surge has also intensified pressure on short sellers, who had bet on Rivian’s stock price falling as the company, according to the New York Times, has been losing tens of thousands of dollars on each vehicle sold and some analysts suspect it wouldn’t be able to survive long enough to be profitable without the Volkswagen deal.

With a high short interest of 18.85% and an average coverage period of just over 4 days, according to Fintel, many short sellers have likely been forced to unwind their positions at a loss.

This high level of short interest, combined with the rapid stock rise, could lead to a short squeeze, where short sellers are forced to buy back shares to cover their positions, further driving up the price.

Similar trades aren’t uncommon in the cryptocurrency, with CryptoGlobe recently reporting on an unidentified insider trader who managed to turn just $1,200 into nearly $1 million in just three hours trading a newly launched cryptocurrency through four new wallets after acquiring 19% of that cryptocurrency’s total supply.

Featured Image via Pixabay