Bear Signal Flashes After UBER Ruling

Uber has shed 27% since it went public in May

Digital Content Manager
Dec 24, 2019 at 10:53 AM
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Ride-hailing concern Uber Technologies Inc (NYSE:UBER) is inching higher today after the company's founder Travis Kalanick said he would be stepping down from the board of directors in order to focus on his new food delivery business and philanthropic endeavors. This announcement comes right on the heels of yesterday's ruling by a New York City judge that struck down the city's cruising cap, which would limit the time drivers for ride share services can spend cruising busier areas without a passenger. 

While this news has UBER up 0.6% to trade at $30.55, the stock has yet to topple recent pressure at its $31 region. The 80-day moving average has provided recent pressure for the security, too, and this wouldn't be the first time. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two similar run-ups to this trendline have occurred since the stock went public back in May. One month after both of these signals, Uber was lower, averaging a 12.3% drop. From its current perch, a similar move would put the equity at $26.79 -- just north of its mid-November all-time lows. 

UBER Dec 24

Despite its 27% year-to-date deficit, the options pits have been overwhelmingly bullish. In the last 10 days, 6.21 calls have been bought for every put on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Echoing this, short interest has dropped by 35.5% in the last two reporting periods. 

That being said, options are quite inexpensive right now. Uber's Schaeffer's Volatility Index (SVI) of 36% sits in the low 4th percentile of its annual range. This means options traders are pricing in extremely low volatility expectations right now. 

 

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