Ride share company Lyft (LYFT) is down 20% over the past year, although shares are well off their lows from last summer. One trader sees the stock trending higher over the coming days.
That’s based on the March $14.50 calls. With 18 days until expiration, 5,625 contracts traded compared to a prior open interest of 203, for a 28-fold rise in volume on the trade. The buyer of the calls paid $0.42 to make the bullish bet.
Lyft shares recently traded for about $13.30, so the stock would need to rise by $1.20, or about 9%, for the option to move in-the-money. That’s well within in Lyft’s trading range over the past three months.
Lyft has faced some pressure in recent quarters from strong competition. Plus, the stock is still a bit pricey at 222 times earnings.
However, Lyft is the second-largest player in the ridespace sector, and growing cash flows could improve the company’s operational performance in the quarters ahead.
Action to take: Speculative investors may like shares here, for a further uptrend in the months ahead. Investors may want to take some quick short-term profits if the stock manages to get to the $15 range, especially before its next earnings report in early May.
For traders, the March $14.50 calls are well priced for a potential bounce higher in the coming days, and traders should take a quick profit on any bounce higher in shares in the coming week.
Disclosure: The author of this article has no position in the company mentioned here, but may to trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.