Continuing to ride high from an earlier-announced partnership, investors in China’s U Power (US:UCAR) — a technology enterprise that develops its proprietary battery-swapping solution for the electric vehicle market — stoked a nearly 19% increase in the equity’s value on June 2, bringing the holiday-shortened week’s total increase to more than 150%.

UCAR stock is giving back crumbs, down 2.7%, at last look in Monday morning trading. The Shanghai, China-based company, US traded since late April, was founded in 2013 and booked $2 million in revenue for the 12 months ended June 30, 2022, according to Renaissance Capital. In January 2022, it started operating a battery-swapping station, under a cooperation agreement with a local gas station operator in Quanzhou City.

Undergirding this blisteringly strong performance is U Power’s deal with Japan’s Quantum Solutions (JP:2338). Billed as the first and only independent EV company listed on the Tokyo Stock Exchange, according to its website, the partnership theoretically enables U Power to tap into Japan’s potentially viable EV market.

U Power CEO, director and chairman Jia Li remarked, “[w]e are thrilled to cooperate with Quantum Solutions. This collaboration brings together our expertise in EV battery technology with Quantum Solutions’ market presence in Japan’s EV market. Together, we aim to create a new benchmark in Japan’s new energy technology and electric vehicle industry.”

Li further stated that, “[m]oving forward, we plan to continue to seek new strategic partners and tap into the potential of Japan’s EV market. We expect to utilize our UOTTA battery-swapping technology to innovate and ultimately expand into Japan’s EV market. We anticipate the partnership will generate substantial value for our shareholders.”

Little EV Interest

Fundamentally, the massive sentiment burst in UCAR stock centers on the underlying total addressable market. According to data compiled by Statista, in 2021, approximately 1% of sold passenger cars in Japan were EVs, increasingly by 0.36% compared to the previous year.

However, the challenge for UCAR stock will be the apparent lack of consumer interest in electrification, a culture shock that runs counter to trends seen in other parts of the world. According to Nikkei Asia, Japan’s EV sales in 2022 accounted for just 2% of the domestic market, trailing China and Europe, with both regions clocking in at nearly 20%.

What’s more problematic, Mordor Intelligence predicted that the Japanese EV sector will only see tepid expansion at a compound annual growth rate of 0.21% between 2023 and 2028. Therefore, while optimism rang high for UCAR stock when the aforementioned deal was announced, trading sentiment has become much more contested.

What’s Revealed in Unusual Options?

For instance, UCAR stock represented a key highlight in Fintel’s screener for unusual stock options volume. Specifically, call volume hit 11,805 contracts against an open interest reading of 2,815. On average, call volume reaches only 781 contracts.

However, on the other side, put volume came out to a very respectable 9,992 contracts against open interest of 5,807. Here, the average put volume reaches a level of only 938 contracts.

Moving forward, investors should note that U Power’s put/call ratio currently stands at 2.06. Since puts generally represent bearish bets, an underlying ratio greater than one indicates pessimism. Combined with a tough Japanese auto market, UCAR stock is not quite the slam dunk it initially appears.

This article originally appeared on Fintel

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