Rideshare company Lyft (LYFT) sank over 17% earlier this week when it reported earnings. Shares are now slightly down for the year, and one trader sees further downside through the end of next year.
That’s based on the December 2025 $8 puts. With 497 days until expiration, 45,577 contracts traded compared to a prior open interest of 613, for a 74-fold rise in volume on the trade. The buyer of the puts paid $1.70 to make the bearish bet.
Lyft shares recently traded for about $9, so they would need to drop by $1, or about 11%, for the option to move in-the-money. The stock is right at its 52-week low of $8.85.
Although Lyft’s most recent report beat on revenue and earnings expectations, and the company reported its first quarterly profit, the company did note that bookings missed its estimates. That could impact sales and revenues in future quarters. That has investors scared off of the stock, at least until that turns around.
Action to take: Investors should avoid shares for now. The stock is in a downtrend, and with shares making new lows, it may take some time to find a support zone for the stock price.
For traders, with shares trending down, a put option trade looks ideal. The December 2025 puts have plenty of time for a bigger selloff to play out.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.