Layers of Resistance Expand for This Ride-Hailing App

Short interest has taken a 13.4% haircut in that last two reporting periods

Jan 12, 2022 at 2:22 PM
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Ride-share giant Uber Technologies Inc (NYSE:UBER) is down 26% year-over-year, breaking to a year-to-date low in the fourth quarter of 2021. Further, the shares were rejected at their $45 initial public offering (IPO) price, as well as the 200-day moving average, a few days ago. These layers of resistance make now the ideal time to bet on UBER's next move lower. 


Analysts look overdue for bear notes, as 22 of the 25 in coverage still rate the equity a "buy," and the stock's 12-month average price target of $67.20 is an overwhelming premium to the equity's current trading price. There's also a lack of organic buyers, evidenced by the fact that short interest has taken a 13.4% haircut during the past two trading periods.
An unwinding of optimism from options traders could also put pressure on Uber stock, as its 10-day and 50-day call/put volume ratios at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sit in the 99th and 100th percentiles, respectively.

Lastly, the stock is seeing attractively priced premium. UBER's Schaeffer's Volatility Index (SVI) of 45% stands higher than just 25% of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. Our recommended put has a leverage ratio of -4.35, and will double in a 23.9% decline in the underlying equity.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this UBER commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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