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Uber Makes One Stop Lower Before Bulling Break#uber Has been building the final right formation of an inverse head and shoulders over the last week. As we see the triangle starting to tighten we can expect to see a breakout soon. Be cautious of the four hour RSI dipping below 50%, indicating we may see another reset of the RSI before we break to the upside.With Tesla showing interest in automation of public transportation and stimulus funding likely going to companies like Uber and others like it, i remain bulling long-term.
NYSE:UBERLong
by Crosshairs_Capital
1
What Is The Wheel Option Strategy?The Wheel is an options trading strategy where first we are selling puts to collect premium. In the instances where we get assigned the stock, we’re then selling calls to collect even more premium. As you know, I’ve been actively trading “The Wheel” since the middle of the year (2020) and at the time of writing this, have yet to realize a loss. In this article, (based on a video from August 21st, 2020), I want to talk about a specific “Wheel” trade on UBER where we ended up getting assigned shares. Wheel Option Strategy Example: UBER Within The Wheel, there are three trades that can take place. The first is that we are selling puts. The idea here is to collect premium and to get assigned stocks at a discount, to buy stocks at a lower price than they are trading right now. Then once we have the shares, we are selling calls. So let me walk you through step by step of exactly how it works. Step 1: Selling Puts So let’s talk about the first trade that we did here. For the first trade, we were selling puts, and I want to take a look at the very specific example here. We sold 7 August 14th expiration, 30 puts at $0.25. So this is $25 per option. 7 of these, times 25 so we collected $175 in a little bit less than one week. The idea here was that I believe UBER would stay above $30 by this expiration, resulting in me just collecting the premium for the puts I sold. So let’s review all the trades I’ve taken in UBER through this period: I have eleven winning trades. Here is what happened with Uber. The price dipped below the magic 30. And here’s what happens. If it would have stayed above 30 we would just collect the premium, be happy, and sell more puts again. But on the day of expiration, UBER had a sharp sell off dipping below the put strikes I sold. Step 2: Buying Shares So we had to buy the shares and this is actually the second part of the trade. This is what the broker did for us automatically. We bought Uber at 30. Here’s the deal, for every one put that you’re selling you have to buy 100 shares. Now, something odd happened here. So I should have received 700 shares of Uber in my account because when you’re selling puts, it means this means you have to buy at the strike price that you’re selling it. So since I sold 7 puts, I should have received 700 shares. But for one reason or another, I only received 400 shares. Kind of a bummer, but it’s okay. Now, this premium, since we sold it, we are going to keep it. Whenever we sell an option and collect premium, we are going to keep it (the premium) no matter what happens. So now that I’m the proud owner of 400 shares of UBER at this stage, here’s where the next part of the trade comes in: Step 3: Selling Calls This is where now we start the “Wheel” rolling. This is the really fascinating part of the strategy and when it clicks, you’re going to see why I absolutely love it! With 400 shares of UBER, this means I can now sell 4 calls against my shares, creating what’s called a “Covered Call.” So we sold four calls at a strike price of 31 expiring August 28th. Again, this article was written based off a video I recorded on August 21st, 2020. And we sold those for $0.52. This means $52 per one option. 52 times 4 means that we received another $208. So this is the premium that we received and nobody can take this away from us. We’re not planning to close this trade and buy back this call, we would just leave it open. So to this point we have received $383. 3 Scenarios That Could Happen With Uber Now I want to look at three possible scenarios of what happens if Uber closed below $30 on August 28th. So in a week from now, we want to see what happens if Uber is below $30, if it is between $30 and $31, and if it’s trading at $31. First of all, the premium that we received for the puts we can keep. I mean, $175 is already ours nobody can take this way. This is in all scenarios here. We also receive the premium for the calls that we have sold here and that is $208 and nobody can take this away from us. Scenario 1: Uber is trading below $30 So let’s say Uber drops all the way down to $29. In this case, on our shares, we would have an unrealized P&L. This is important, unrealized, 400 times $1, would be -$400. Now the important thing, it’s unrealized because we kind of don’t care at this point, right? Because we’re not planning to sell Uber we are planning to hold it. At this point, the whole premium collected is $175, plus $208 so it’s $383. This is how much we have realized to this point, but remember in this scenario we would be underwater on our shares (or an unrealized loss). Now, what we would do here is sell more calls. But we’ll talk about this here in just a moment. Scenario 2: Uber is trading between $30 and $31 If Uber is between $30 and $31, let’s just say Uber is at $30.50. We bought Uber shares at $30, and in this scenario, it’s trading at $30.50, so we make 400 x $0.50. So we’re making $200 on our shares, plus we’re making $383 on the calls and puts that we collected. So this would bring our total to $583. Not bad at all. Scenario 3: Uber is trading above $31 If Uber is above $31, it doesn’t really matter because we sold 4 calls at a strike price of $31. So this means that we have to sell Uber again at $31. Yes, if it goes to $33, $35 we cannot participate, and that’s okay. It’s very likely that Uber stays between $29 and $31, maybe $32, right? If it rallies to $34 good for Uber. Again we’re talking about the next week that’s what our outlook is here. If this would happen, we would make $1. Because we bought 400 shares at $30, and if we have to sell it again at $31, we make 400 times $1. So this means that we are making $400. This is how much we are making on the stocks, plus the $383 that we received in premium we are going to keep. This here is our best-case scenario. So if Uber is below $30 we would sell calls again, and the Wheel would continue. If it is between $30 and $31, we sell calls, and if it is above $31 we are being called away, so we are getting rid of the shares. And this means that right now we would start selling puts again. Wheel Option Strategy Summary I wanted to show you this, and also very specifically, where we are right now with our Uber position. If you look at Uber right now, you’ll see that we are making money on our shares and we are losing a little bit of money on our calls that we sold, but right now, we are up $292. Now we hope that by next week we’re up either $583 or $783, and this would be the win of only two weeks. This is how the Wheel works, this is how the Wheel ‘turns’. The trades we are in right now are working quite well. Thus far we have a really great track record. If you found this article on the Wheel option strategy helpful, feel free to leave a comment below and share it with others who will benefit from reading it.
NYSE:UBER
by rockwelltrading
1
UBER buyers are very bullish coming up to earnings.Uber had a very bullish end of last week. They have their hands in many things outside of ride sharing. They now have expanded into package delivery, freight, food delivery, and courier services which are operations that have increased due to COVID. I anticipate it will reach the $38 resistance level by earnings and even break up to $42 and all time highs off of anticipation. After earnings it's hard to tell unless they blow it out of the water.
NYSE:UBERLong
by scw0008
economic slowdown or recession? buy UBERUber is the market leader in the fast-growing “ride sharing” economy. A sector that we believe will continue to grow strongly, even when the economy slows down. In the event of an economic slowdown or recession, people will only look more for cheaper alternatives, such as Uber. A restart of the aviation sector will give a significant boost to Uber's business model. Uber Eats was the child of concern that needed to be addressed quickly towards profitability. The disposal of less competitive parts and the merger with Postmates is a good thing in this regard. Via Uber and Uber Eats, synergies can also arise that will lift both platforms to a higher level in the direction of "home delivery". For example, drivers can distribute passengers, goods and food or drivers who are not suitable for transporting passengers can deliver food or packages. In the coming quarters, Uber will have to prove that it is taking the right steps, operationally and financially. If Uber succeeds in this, the current valuation is a piece of cake. Numerous prominent investors already believe that the company is on the right track.
NYSE:UBERLong
by Lion247