Covered Calls Established in Uber Technologies Inc.

This afternoon at 2:55pm, my buy/write net debit limit order was executed and 500 shares of Uber Technologies Inc.(ticker symbol UBER) stock were purchased at $42.25 and 5 July 14th, 2023 $41.00 Call options were sold at $1.91 per share -- a net debit of $40.34 per share -- so the potential time value profit if the stock is in-the-money and therefore closed out by assignment at expiration is $.66 per share [$1.91 Call options premium - ($42.25 stock purchase price - $41.00 strike price)].  This simultaneous buy/write limit order was placed early in this morning's trading session when the stock price was above $44.00 per share, so I was surprised, and pleased, that the stock price declined to the low $42s this afternoon to the point where my $40.34 net limit order price was executed.

This is a repeat of six similar Covered Calls positions in Uber during the past three months and all six were successfully assigned on their respective options expiration dates.  I remain bullish on Uber.  Like the prior six positions, today's new position was established at a moderately in-the-money strike price with an approximate probability that this position will be in-the-money and therefore assigned on the options expiration date of 67.5%.

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 dynamic and visionary 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.  Uber is constantly making improvements to its ridesharing and food delivery models and has just announced it is further extending its business model by entering the North American carsharing market.

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 Q1 2023 earnings 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 has average in the low $70s during the current quarter versus an average of about $105 during the same quarter 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 43 Wall Street analysts that cover Uber is $50.39 per share (+19.3% above today's purchase price). Finally, recently Evercore's Mark Mahaney identified three "value catalysts" that could propel its stock higher: (1) Uber is going to start actually generating positive GAAP earnings; (2) they'll start buying back stock; and (3) they'll finally reach the metrics needed to be included in the S&P 500.

As detailed below, a potential outcome for this Uber Technologies investment is +1.6% absolute return-on-investment for the next 16 days (equivalent to +36.9% annualized-return-on-investment) if the stock closes above the $41.00 strike price on the July 14th, 2023 options expiration date.

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

The net debit buy/write limit order was executed as follows:
6/292023 Bought 500 shares of Uber Technologies Inc. stock @ $42.25 per share 
6/29/2023 Sold 5 Uber July 14th, 2023 $41.00 Call options @ $1.91 per share
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 33.7 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 July 14th options expiration date is follows:
Covered Calls Net Investment: $20,173.35
= ($42.25 - $1.91) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$951.65
= ($1.91 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $41.00 strike price at the July 14th expiration): -$625.00
= ($41.00 - $42.25) * 500 shares

Potential Total Net Profit (If assigned at expiration): +$326.65
= (+$951.65 options income + $0.00 dividend income - $625.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.6%
= +$326.65/$20,173.35
Potential Equivalent Annualized-Return-on-Investment: +36.9%
= (+$326.65/$20,173.35) * (365/16 days)