The options market is betting on a much bigger earnings move this time around for Uber
Uber Technologies Inc (NYSE:UBER) shares earlier touched their lowest point since their third day of trading back in May, but have pared those losses to trade up 0.4% today at $39.32. This bounce may make sense considering the equity's 14-day Relative Strength Index (RSI) was docked at 31 as of yesterday's close, right on the cusp of oversold territory.
The ride-hailing company is preparing to report earnings after the close tomorrow, Aug. 8. This will be the second earnings release for Uber since going public, with the shares posting a slim 1.5% gain after the May release. It's safe to say options traders are expecting a much different story this time around, pricing in a swing of 13.2% for Thursday's trading.
Speaking of options traders, those picking up contracts at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have opened almost 30,000 long calls during the past two weeks, compared to 20,744 puts. However, the most populated front-month contract is the August 37.50 put, where most positions were opened at the ask price, hinting at buy-to-open -- and therefore bearish -- activity.
Another name to watch after the close tomorrow will be Yelp Inc (NYSE:YELP). The shares of the review site have made double-digit percentage moves in three of the past four quarters, including a 14.4% pullback last quarter. This time, the options market is pricing in a 21.3% swing the day after earnings.
Sentiment in the options pits has been unusually bearish, as the 10-day put/call volume ratio of 2.10 at the ISE, CBOE, and PHLX ranks in the 96th annual percentile. Yet during this same time frame, the August 32 and 35 puts saw the largest increases in open interest.
The chart for YELP stock doesn't look great. In fact, the shares have struggled near the $36 price point in recent months, which is near the site of the May bear gap, with the 200-day moving average applying pressure, as well. In just the past three months, the equity is down 15.6%.
