Unusual Options Activity In Lyft

Lyft will be delivering its first earnings report since its IPO after the market close on Tues. Lyft went public with shares priced at $72, opened a little over $87, but it has been all downhill from there.

On the first settlement day for Lyft shares, short sellers shorted over 6 million shares which represented about 20% of the available shares outstanding.  The drama continued when Lyft announced they were considering pursuing litigation after it accused Morgan Stanley of supporting short-selling.

Then Lyft got its first downgrade by Michael Ward of Seaport Global Securities.  He said Lyft’s current valuation bakes in “overly optimistic” assumptions about the transformational nature of ride hailing and thinks price is headed to $42.

Now in the face of Uber’s IPO later this week, Lyft Inc. shares fell today kicked amid news that drivers of ride-sharing services were planning a massive strike this week.  Regulatory risks surrounding how drivers are compensated and recognized by ride-hailing services, is one of the hurdles that must be overcome if  like Lyft and Uber, if ride sharing companies are going to thrive in the future.

Despite all the negative events and news,

Prior to Monday’s open, a trader bought 1,508 Lyft call options at a $70 strike price that expire on June 21. The calls were purchased at the ask price of $2.497 and represent a $376,547 bullish trade ahead of the company’s earnings report. The break-even price for the call options is $72.497, more than 18 percent above today’s premarket trading price.


That’s a bold bet, but what do I know.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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