Uber Technologies Inc UBER shares are still trading well below the company’s May IPO price of $45, but a series of unusually large options trades on Monday morning suggests at least one trader thinks the bottom may be in for Uber.
The Trades
On Monday morning around 9:14 a.m., Benzinga Pro subscribers were alerted to a sale of 2,000 Uber call options at an $44 strike price that expire on Friday. The calls were purchased at the ask price of 30 cents and represent a $60,000 bullish bet that Uber shares will finish the week above $44.30.
Shortly thereafter, likely the same trader purchased an additional 750 of the same call options at the same price. This second trade represented a $22,500 bullish bet on Uber.
Less than an hour later, possibly the same trader sold 2,500 of those same Uber call options expiring on Friday at the bid price of 20.1 cents. If it was the same trader that purchased those options earlier in the day, he or she took a $22,500 loss on the trade.
Finally, at around 10:41 a.m., a trader purchased 500 Uber call options at a $41 strike price that expire on Friday. The calls were purchased near the ask price at $1.50 and represent a $75,000 bullish bet that Uber will be trading above $42.50 by the end of the week.
Options Insight
Even traders that focus exclusively on the stock market watch the options market closely to gain insight into what option traders may be thinking. Due to the relative complexity of the options market, options traders are generally seen as more sophisticated than the typical stock trader. Large options traders are often institutions or wealthy individuals that may have a unique perspective and/or advanced information on a given stock.
Post-IPO Bottom In?
The mostly bullish option trading in Uber Monday suggests the smart money may believe long-term investors will start swooping in to but the post-IPO dip in Uber stock now that they are convinced a near-term bottom is in. Uber hasn’t made news lows since it bounced off the $36 level on its second day of trading. In the past two weeks, the stock has found support several times in the $39 to $40 range.
Unfortunately, there’s no way to be 100 percent certain whether the buys are a standalone position or a hedge against a larger stock holding. Given all of Monday’s trades mentioned above were under $80,000 in size, they are unlikely to be hedges in this instance.
Uber's stock traded around $40.65 per share at time of publication.
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