Self-driving vehicle company
Aurora Innovation (AUR) is up 167% over the past year, but have been pulling back from their 52-week high of $6.79 in recent weeks.. One trader sees the pullback continuing in the weeks ahead.
That’s based on the November 15 $4.50 puts. With 35 days until expiration, 10,019 contracts traded compared to a prior open interest of 145, for a 69-fold rise in volume on the trade. The buyer of the puts paid $0.40 to make the bearish bet.
Aurora shares recently traded for about $5.30, so they would need to fall by about $0.80, or about 15%, for the option to move in-the-money.
The strike price of the options is well over the stock’s 52-week low of $1.60.
Aurora is still in its early stages. It has no revenues to speak of, and the company lost over $720 million in the past year. With just over $1 billion in cash on the balance sheet, Aurora needs to start earning in the next year or they’ll have to issue more stock or go into debt.
Action to take: Shares are coming off a strong uptrend, and likely have a bit more downside over the coming weeks. Interested investors can likely start accumulating shares at a better price.
For traders, the November 15 puts are an inexpensive way to bet on the price trending lower. Traders could see high double-digit returns or better on shares, depending on how much more the stock sells off.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
