Unusually high put options volume today in Uber Technologies (UBER) could augur well for UBER stock. The strike price is over 18% below today's price, or "out-of-the-money." It could be initiated by UBER short-put sellers looking for yield and a potentially lower buy-in point.
UBER is up about 3% in midday trading at $67.85, after closing at a 6-month low of $65.92 on Friday. However, it's well off a recent closing peak of $79.17 on May 6.
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UBER stock - last 6 months - Barchart - July 27 midday Uber's Q2 earnings are due out on Aug. 5 (before the market open). Analysts expect at least 12.72% revenue growth to $14.26 billion for Q2.
That compares to $12.65 billion last year, according to Yahoo! Finance. In Q1, revenue growth was 14.48%, slightly lower than analysts' expectations, according to Seeking Alpha.
Moreover, earnings per share (EPS) forecasts are for 80 cents on a normalized basis (83 cents on a GAAP basis), vs. 63 cents EPS last year (Q2).
Last quarter EPS was significantly below analysts' projections, which could account for the weakness in UBER stock
Unusual Options Volume Today
The strike price for today's huge put option volume is $55.00 for expiration in a little over one month (Aug. 28). This can be seen in today's Barchart Unusual Stock Options Activity Report.
That strike price is 18.7% lower than today's price. Buyers may be hedging long UBER investments with a bet that earnings could disappoint (i.e., buyers of the puts). In other words, it could be a cheap form of insurance for long UBER stockholders.
UBER puts expiring Aug. 28 - Barchart Unusual Stock Options Activity Report - July 27, 2026 However, sellers of these puts earn 45 cents per put contract shorted. That works out to an average yield of 82 basis points (0.82%), or a little less than 1% for the next month.
Moreover, if UBER stock moves up from its trough closer to earnings, the put premium is likely to fall quite dramatically. That is because the strike price is so far away from today's trading price.
Moreover, there is every indication that UBER stock looks too cheap here. Here's why.
UBER's Strong Cash Flow
In Q1, Uber generated $2.286 billion in free cash flow (FCF) on $11.28 billion, representing a 20.27% FCF margin. That can be seen on page 32 of its supplemental info deck and page 12 of its earnings release.
Moreover, for the trailing 12 months (TTM), it generated almost $10 billion in FCF ($9.799 billion), as seen in the supplemental deck. That represented 18.25% of TTM revenue, according to Stock Analysis. In other words, its FCF margin is rising as revenue grows.
This could lead to higher FCF going forward. For example, analysts now project $58.02 billion in 2026 revenue (up 11.5% from $52.02 billion in 2025), as well as $67.08 billion in 2027 (+15.6% over 2026 estimates).
As a result, for the next 12 months (NTM), revenue could average $62.55 billion. So, assuming the company generates at least 20% in FCF, the FCF could rise to $12.51 billion (0.20 x $62.55b).
That is 27.65% higher than the $9.8 billion in TTM FCF and could lead to a higher stock price.
UBER Price Targets
Today, UBER's market cap is $138.14 billion, according to Yahoo! Finance. So, its TTM FCF yield is 7.09% (i.e., $9.8b / $138.14b). That's the same as multiplying FCF by 14.1x (1/0.0709)
So, applying this to my $12.51 FCF forecast over the next 12 months:
$12.51b x 14.1 = $176.4 billion fair market value (FMV)
That is 27.7% higher than today's market cap, and implies that UBER's price target (PT) is over $86 per share:
$67.85 x 1.277 = $86.64 PT
Analysts surveyed by Yahoo! Finance have a much higher average PT: $104.10, or +53% upside. Similarly, Barchart's mean survey PT is $105.69, +56%, and AnaChart's survey of 27 analysts is $105.71.
The bottom line is that UBER stock looks way too cheap, as long as it keeps generating strong FCF margins.
That could be why investors are willing to short out-of-the-money puts today.
Better OTM Put Plays
In fact, it might make sense for less risk-averse investors to short closer-in puts. For example, the $63.00 put option strike price, about 6.5% below today's price, has a midpoint premium of $1.75.
That means a short-seller of this put option can make a one-month yield of 2.778% (i.e., $1.75/$63.00).
UBER puts expiring Aug. 28 - Barchart - As of July 27 In other words, an investor who posts $6,300 with their brokerage firm can earn $175.00 in their account immediately, after entering an order to “Sell to Open” 1 put at $65.00. The $6,300 acts as collateral in case UBER drops to $63.00 on or before Aug. 28 and the account is assigned to buy 100 shares.
But, even if that occurs, the investor has a lower breakeven point:
$63.00 - $1.75 = $61.25
That is 10% below today's price. Moreover, the likelihood of this occurring is low, as the delta ratio is only -.27, implying just a 27% chance, based on past volatility, of UBER dropping 6.5% to $63.00
The bottom line is that shorting UBER puts today looks like an attractive strategy for value investors.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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