Uber (UBER) has seen a decent pullback, and I think that presents a solid buying opportunity. I recently took a trade on Uber using options, structuring it in a way that allows me to collect premium while maintaining a high probability of profit.
Here’s why Uber could be setting up for a bullish move.
A Strong Support Level in Play
Uber is currently trading around $73, but my trade is structured with a break-even closer to $57 — an area where I see strong support. If Uber drifts lower, I’m comfortable owning shares at that level.
This setup is all about playing the probabilities. With a 90% chance of profit built into the trade…
I like the risk-reward.
The bigger picture looks solid, too. Uber has been on an impressive growth trajectory, expanding its services and improving profitability. While broader market conditions can influence short-term price action, I believe Uber’s fundamental value remains intact.
Based on discounted cash flow models, fair market value for the stock is well above $100, so this pullback may just be a temporary blip.
Market Conditions and Strategy
Of course, Uber isn’t trading in a vacuum. Broader market sentiment, the Fed’s rate policy, and overall economic conditions will play a role in how it moves. But even with those uncertainties, I think this trade setup makes sense.
Right now, I’ve structured my trade with a 67.50/65/60 put spread, collecting a $1.34 credit — more on this below. This creates a profit trap that gives me flexibility — if Uber stays above my key levels, I win.
If it drops to my break-even zone, I’m still comfortable. That’s the beauty of trading both probability and fundamentals.
Traders looking for an entry into Uber might want to consider similar strategies — either using options to generate income or simply taking advantage of the current dip in share price.
If Uber stabilizes and moves higher, this could be an excellent setup heading into the next earnings cycle.
Explaining my put spread:
- 67.50/65/60 → These are the strike prices of the put options used in the trade.
- 67.50 put (bought) → Buying a put option at this price provides downside protection.
- 65 put (sold) → Selling this put creates the main leg of the spread, generating premium.
- 60 put (sold) → Selling an additional put further lowers the overall cost and increases the credit received.
- Collecting a $1.34 credit → This means I received $1.34 per contract in premium when entering the trade. Since options contracts represent 100 shares each, this translates to $134 per contract collected upfront.
This setup creates a “profit trap,” meaning I profit if Uber (UBER) stays above certain levels. Here’s how it plays out:
- If Uber stays above $67.50, the puts expire worthless, and the full $1.34 credit is kept as profit.
- If Uber drops below $65, the trade starts to lose value, but risk is managed because of the protective 60 put.
- If Uber falls below $60, the max loss is capped.
Essentially, this is a bullish strategy that profits if Uber stays above $65 at expiration while limiting downside risk. The $1.34 credit reduces overall risk and provides income while waiting for the trade to play out.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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