Bear Note Sends Lyft Stock Lower

Short-term premiums on LYFT look affordable

Managing Editor
Jul 1, 2019 at 1:30 PM
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Shares of ride-hailing service LYFT Inc (NASDAQ:LYFT) are sliding this afternoon, last seen down 3.7% at $63.27. Guiding the plunge is an earlier initiation by Monness Crespi Hardt with a "neutral" rating. The newly public stock has seen a myriad of analyst coverage since its trading debut on March 29. As of Friday's close, 27 analysts were following Lyft stock, with a majority 19 sporting a "buy" or "strong buy" recommendation. The stock's average 12-month price target is $71.41, almost 13% above current trading levels.

Ahead of today's sell-off, the Uber rival looked to be on a cautious journey higher, following its steep pullback from its May 13, record low of $47.17. Emerging as support has been the newly formed 20-day moving average, a trendline which briefly acted as a ceiling toward the shares in late April to early May. In fact, June has surprised as LYFT's first monthly gain ever, paving the course for the stock's now 39% upside to its mid-May bottom.

Daily LYFT with 20MA Since March IPO

Looking into options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), shows Lyft stock with a 10-day call/put volume ratio of 2.47. In other words, more than two calls have been purchased for every put on the security over the past 10 trading days.

Lastly, Lyft's short-term option premiums look relatively inexpensive at the moment. This is per the security's Schaeffer's Volatility Index (SVI) of 46%, which stands in the bottom percentile of its annual range. In other words, near-term options are pricing in relatively low volatility expectations.

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