Automation software company
UiPath (PATH) is up about in-line with the overall stock market in the last year. One trader sees a pullback ahead for shares.
That’s based on the August $15 put options. With 134 days until expiration, 6,406 contracts traded compared to a prior open interest of 102, for a 63-fold rise in volume on the trade. The buyer of the puts paid $0.34 to make the bearish bet.
UiPath shares recently traded for about $21.50. For the option to move in-the-money, shares would need to drop $6.50, or about 30%, for the option to move in-the-money.
UiPath shares peaked in early February with a 52-week high of $27.87, and have been trending lower since.
The company is still unprofitable, even as revenues soared by 31% last year to $1.3 billion.
However, UiPath has ample cash on the balance sheet, so while shares may continue to decline, there’s a low risk for bankruptcy or a capital raise at this time.
Action to take: Investors interested in the company should see if there’s another leg lower for shares. If that plays out, there may be a buying opportunity in the $15-17.50 range.
For traders, the August put options have plenty of time for another drop in shares to play out in the coming months. Traders should look to take profits on a drop to the high teens.
