Uber (UBER) recently broke out from a cup-with-handle pattern, moving past a 97.54 buy point. With Uber stock now trading near that entry, investors may consider using an options bull call spread to capture further upside.
When constructing a bull call spread, an investor buys a call option while also selling a higher-strike call option. In the case of Uber, investors can consider a bull call spread by buying a 100 call while selling the 115 call on a Nov. 15 expiration.
Traders can place this trade for a debit of around $4.80 a share, based on recent trading. This also coincides with the maximum loss of $480 an investor will experience if shares are under 115 on expiration.
The maximum profit is the width of the strikes minus the debit paid. In this case it’s $15 minus $4.80, or $10.20. In a 100-share contract, that works out to $1,020. Investors will realize this maximum profit if shares of Uber trade above 115 on expiration.
Unlike buying shares outright, the risk is capped at the initial debit. This approach makes sense for Uber stock, given it has already cleared three buy points this year, climbing an impressive 65% in 2025.
Uber Stock Buyback, Higher Bookings
Strong fundamentals have fueled those gains. In the second quarter, Uber reported gross bookings up 18% year over year and authorized a massive $20 billion buyback program.
Meanwhile, concerns about competition from self-driving startups have eased. Uber has leveraged its technology and customer base through strategic partnerships, most notably its multiyear deal with industry leader Waymo.
Uber has done its best to diversify its bets and aim for further growth. It made its newest partnership on Sept. 18 with Flytrex, expanding Uber Eats into drone delivery.
Notably, this options spread gives exposure to Uber’s Q3 results, expected in late October. Analysts currently forecast earnings of 69 cents a share, down sharply from $1.20 in the year-ago quarter, on a 19% jump in revenue to $13.24 billion.
Uber stock currently boasts a Composite Rating of 93 out of a best-possible 99 from Investor’s Business Daily. The stock ranks fourth in IBD’s leisure services group, which rates 29th out of 197 industries.
Steven Bell is a writer and trader based out of Vancouver, British Columbia. He is the author of IBD’s Income Investor column, focused on shedding insight on low-risk, underfollowed stocks.
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