Covered Calls Established in Uber Technologies Inc.

At 2:13pm Eastern Time this afternoon, my Covered Calls net debit limit order was executed and 500 shares of Uber Technologies Inc.(ticker symbol UBER) stock was purchased at $37.94 and 5 May 19th, 2023 $36.50 Call options were simultaneously sold at $1.83 per share -- a net debit of $36.11 per share -- so the potential time value profit if the stock is in-the-money and therefore closed out by assignment at expiration is $.39 per share [$1.83 Call options premium - ($37.94 stock purchase price - $36.50 strike price)].  I often enter my net debit Covered Calls limit orders at a price well below the current price, so they often do not decline to my price and therefore are not executed and are cancelled at that day's market close.  But in this case, Uber's stock price declined by over 2% today and my net debit limit order price did get executed at my $36.11 per share price.  This is a repeat of similar Uber Covered Calls positions which were successfully assigned at their respective March and April 2023 options expirations in the Covered Calls Advisor Portfolio.  For today's new position, the approximate probability that this position will be in-the-money and therefore assigned on the options expiration date is 73.9%.

As described previously, Uber has a bright future as the pre-eminent rideshare company in North America (58% of revenue) and also a substantial worldwide presence  in over 70 countries with good ongoing growth prospects under the strong leadership of CEO Dara Khosrowshahi.  Uber's primary rideshare competitor in the U.S. is Lyft, but Uber dominates with about three times the ridesharing market share of Lyft, and unlike Lyft it also has a strong food delivery business (and a fledgling freight management business), so its current market capitalization is about ten times greater than Lyft's.

In addition to the explanation above for my bullishness on Uber, other reasons I remain confident in their potential are: (1) Uber had a stellar report that exceeded analysts' expectations both on EPS and Revenues. In addition, their Q2 guidance of $800 to $850 million EBITDA was substantially above analysts' expectations of $749 million; (2) Gasoline is a significant cost to Uber drivers, and the spot price of WTI Oil is now in the low $70s versus in the low $90s at this time last year; (3) Major airlines are reporting continued substantial consumer demand above last year's level, and Uber obtains a significant portion of their rideshare revenue at airports; and (4) The current average target price of the 44 Wall Street analysts that cover Uber is $48.59 per share (+28.1% above today's purchase price).    
 

As detailed below, a potential outcome for this Uber Technologies investment is +1.1% absolute return-on-investment for the next 11 days (equivalent to +35.2% annualized-return-on-investment) if the stock closes above the $36.50 strike price on the May 19th, 2023 options expiration date.

Uber Technologies Inc. (UBER) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:
5/9/2023 Bought 500 shares of Uber Technologies Inc. stock @ $37.94 per share 
5/9/2023 Sold 5 Uber May 19th, 2023 $36.50 Call options @ $1.83 per share
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 36.5 when this position was established.  Also, there is no earnings report prior to the options expiration date.

A possible overall performance result (including commissions) if this position is assigned on its May 19th expiration date is follows:
Covered Calls Net Investment: $18,058.35
= ($37.94 - $1.83) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$911.65
= ($1.83 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $36.50 strike price at the May 19th expiration): -$720.00
= ($36.50 -$37.94) * 500 shares

Potential Total Net Profit (If assigned at expiration): +$191.65
= (+$911.65 options income +$0.00 dividend income -$720.00 capital appreciation)
Potential Absolute Return-on-Investment: +1.1%
= +$191.65/$18,058.35

Potential Equivalent Annualized-Return-on-Investment: +35.2%
= (+$191.65/$18,058.35) * (365/11 days)

The downside 'breakeven price' at expiration is at $36.11 ($37.94 - $1.83), which is 4.8% below the current market price of $37.94.