Shares of ridesharing firm
Uber Technologies (UBER) have been rangebound over the past few months. One trader sees the possibility for shares to keep trending upward toward the higher end of their range.
That’s based on the May $45 calls. With 121 days until expiration, 9,653 options traded against a prior open interest of 209, for a 46-fold rise in volume. The buyer of the calls paid $3.60 to make the trade.
With shares around $41.50, the stock would need to rise about 8.5 percent for the option to move in-the-money. With a higher rangebound price near $50, and still well off a 52-week high of $64, it’s possible for this option to move in-the-money in the next few months.
While the stock is down over the past year, revenue is up 72 percent and the company is closing in on profitability, although it may still operate at an overall loss this calendar year in line with prior years.
Action to take: The stock did start a new upward trend in December, and could go into the upper $40 range before encountering resistance, so buyers could potentially make double-digit returns in the span of a few months.
Traders can better bank on this potential move higher with the call option, as a May date has ample time to pay out and the downside risk is much lower compared to owning shares.
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 of the companies mentioned in this article.