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Uber Technologies (UBER) Option Traders Favor Calls Ahead of Earnings - Dailyforextrading

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Uber Technologies (UBER) Option Traders Favor Calls Ahead of Earnings - Dailyforextrading

Investors have slightly bid up the share prices of Uber Technologies, Inc. (UBER) ahead of the company's fiscal fourth-quarter earnings announcement.


Uber could be considered a "reopening" stock—a company that gains from the abatement of COVID-19 restrictions—as Uber benefits from more people out and about and traveling.

Analysts are predicting that the ride-hailing app provider will report a net loss per share of $0.29 and $5.36 billion in revenue.

These figures represent an expected 27% reduction in loss per share and a 69% increase in revenue on a year-over-year basis.

Uber remains a relatively "young" company—having IPOed in 2019—and is still in growth mode. The initial public closures of the COVID-19 pandemic severely affected the bottom line of a company that has yet to find its way to profitability.

However, the company's food delivery service kicked into overdrive during this time. Uber, which could be considered as synonymous with rideshare as Kleenex are with facial tissues, holds an estimated 69% of the U.S. ridesharing market and 37% of the global market, and it recently reported gross platform bookings at an all-time high, showing strong customer demand in recent months.

Options traders appear to be placing their bets that the Uber share price will rise in the near term. That's because the open interest and recent trading volumes skew toward long call options, and speculative upside bets decline at a much lower rate than speculative bets made to the downside using puts.

The COVID-19 pandemic affected the stock market in a variety of ways. After a large move to the downside in March 2020, the prolonged rebound rally carried many stocks and indexes to all-time highs.

This market environment grossly affected stocks that benefit from people traveling—such as cruise lines, airlines, and stocks such as Uber.

Conversely, this environment created a positive environment for "stay-at-home" stocks—companies that benefit from workers and consumers spending prolonged periods inside their homes.

 With variants of COVID-19 continuing to have a prolonged effect on economies, it is possible to gauge economic sentiment by comparing these "reopening" stocks to "stay-at-home" stocks.

The chart below compares Uber stock with the US Global Jets ETF (JETS), Zoom Video Communications, Inc. (ZM), and Peloton Interactive, Inc. (PTON).

JETS is an ETF that tracks airline stocks—companies that have been severely affected by the pandemic. Zoom and Peloton are companies that benefitted greatly from more people working and spending time at home.

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This chart highlights how, since the start of 2022, the "reopening" stocks of JETS and Uber have outperformed "stay-at-home" stocks Peloton and Zoom. Source: Investopedia; Author: GORDON SCOTT

 

 

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