Waiting for Uber IPO? Here Comes Yandex

Waiting for Uber? Here Comes Yandex

Everyone’s waiting for Lyft and Uber to go public. Did you know Russia’s top Internet stock is also active in the ride-sharing space?

Last month, Yandex (YNDX) reported 216 percent revenue growth for its Taxi division as ridership more than doubled. The service operates in cities across Eastern Europe, Central Asia, Ivory Coast and Israel.

Yesterday, options traders looked to hail a ride with the Moscow-based company. They used a classic call spread, targeting a potential move into early next year:

  • 20,000 January 45 calls were bought for $2.33.
  • 20,000 January 50 calls were sold for $1.23.
  • That translates into a net outlay of $1.10.
  • They stand to make 355 percent if YNDX rallies 38 percent to $50 by expiration.

The strategy combines long calls and short calls. Long calls fix the price where a stock can be purchased, in this case $45. Short calls generate income to offset the price of the long calls. They also fix the price where the investor must relinquish his or her stock.

Combining the two effectively leverages a move between two prices. See our Knowledge Center for more.

Buyers Defend 200-day MA

YNDX rose 3.31 percent to $36.16 on Tuesday. The Moscow-based company has drifted aimlessly since going public in 2011. Shares fell after the last quarterly report because profit missed estimates, but then buyers defended their 200-day moving average.

Aside from the growth of Taxi, optimists could point to its better-than-expected revenue and continued gains for its key search business. Unlike Alphabet (GOOGL), YNDX’s traffic acquisition costs (TAC) actually declined as a percentage of sales.

But the big story may still be Taxi in coming months — especially as media buzz heats up around the initial public offerings (IPOs) of Lyft and Uber.

In conclusion, YNDX has been showing signs of a turn higher and yesterday options traders looked for a rally to build.

Yandex (YNDX) with 50- and 200-day moving averages. Line at Price indicator in yellow.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.