Does UBER Pay a Dividend - With Options, Yes!

Uber Technologies (UBER) stock has long been a favorite of option traders and has been in a consolidation phase for the last few months.

One bad thing about UBER stock is that it doesn't pay a dividend. But what if we could use options to manufacture our own dividend?

Does UBER Pay a Dividend?

Let's say I have $6,500 to invest into UBER stock, I could simply buy some shares and hope the stock rises.

But, if I want a more conservative play, I could sell a June 20, 2025 put with a strike price of $65 and set aside the $6,500 in case I am assigned on the short put.

That $65-strike put generates around $780 in option premium in just under 12 months.

So, my $6,500 investment into UBER is giving me a 14.95% annualized "dividend".

What’s The Catch?

Well, much like owning UBER shares, if the stock drops, I'm going to lose money in the short-term.

If UBER is below $65 in June 2025, then I will be forced to buy 100 shares at $65. 

So if UBER is below $57.20, at expiration the trade loses money. That’s the breakeven price when we take into account the option premium received.

But, if UBER stays above $65 then I achieve a 14.95% per annum return when the put expires worthless.

Cash secured puts are a bullish strategy but are considered slightly less bullish than owning Uber Technologies stock because the potential gains are limited to the premium received.

The second risk with the trade is that if UBER stock goes on a huge rally, we miss out on any upside. The most we can make is the $780 from the option premium.

Greeks and Equivalent Exposure Level

The $65-strike put currently has a delta of 35, so selling this put gives an exposure roughly equivalent to owning 35 shares of UBER stock, although this will change as the stock moves up and down.

It also means the put has a roughly 65% chance of expiring worthless.

One method which can help cut the risk is to turn the trade into a spread and buy a $50-strike put. This turns the trade into a bull put spread and cuts the risk from $6,500 to around $1,500.

There's lots of interesting scenarios you can create with options.

Company Details

Uber Technologies Inc. provides a platform which allows users to access transportation and food ordering services.

The Company's operating segments consist of Core Platform and Other Bets. The Core Platform segment consists of Ridesharing and Uber Eats.

The Other Bets segment consists of Uber Freight and New Mobility platforms. Uber Technologies Inc. is based in San Francisco, CA.

Of the 40 analysts covering UBER, 35 have a Strong Buy rating, 3 have a Moderate Buy rating and 2 have a Hold rating.

Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.

On the date of publication, Gavin McMaster 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.