Uber Technologies stock is sitting above its 21-day exponential moving average as well as the 50-day and 200-day moving averages. Uber stock is also trading just 1% shy of its all-time high of 87 around midday Monday. Investors who want to generate income from Uber stock could look at selling covered calls on their underlying stock position.
Uber recently announced first-quarter earnings of 83 cents per share, compared with a net loss of 32 cents per share for the same period last year. This beat expectations of 51 cents. Sales rose 14% to $11.5 billion.
A covered call involves buying 100 shares of the underlying stock and simultaneously selling a call option against those shares.
Selling the call limits the upside but increases the yield from the investment in the form of option premium. The investor keeps the premium generated from selling calls no matter what happens with the stock.
Uber Stock: No. 1 In Its Group
According to Investor's Business Daily's IBD Stock Checkup, Uber stock is ranked No. 1 in its group and has a Composite Rating of 94, an Earnings Per Share Rating of 82 and a Relative Strength Rating of 89.
When trading covered calls, most investors sell monthly calls against their stock to make the most of the effects of time decay.
That makes a lot of sense but also requires a lot of active management. What if we sold longer-term covered calls against Uber stock? Let's take a look.
How To Trade A Long-Term Covered Call
On Uber stock, a March 20, 2026, call option with a strike price of 90 recently sold for around $10.60, generating $1,060 in premium per contract. In late-afternoon trading, the option rose further to a best-bid price of $12.40 and best-ask price of $12.65.
Purchasing 100 shares of Uber Technologies stock will cost around $8,600 as of Monday's trading. But the net cost can be reduced by the $1,060 option premium received.
Therefore, we have created a yield of 1,060/7,360 in 313 days, which is 14.4% or 16.79% annualized. That clearly beats the dividend yield of most stocks in the current market and still allows for a modest amount of capital appreciation.
If Uber closes above 90 on the expiration date, the shares will be called away at 90, leaving the trader with a 22.3% return. That's 26% on an annualized basis.
Providing Downside Protection
Covered calls are a fantastic way to generate income from a stock while also providing some downside protection.
If Uber closes below 90 on the expiration date, investors can sell another call if they want to continue generating option premium.
Investors would need to weigh the pros and cons of the stock before initiating a bullish trade like a covered call. 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.
Gavin McMaster has a masters in applied finance and investment. He specializes in income trading using options, and is very conservative in his style. He believes patience in waiting for the best setup is the key to successful trading. Follow him on X/Twitter at @OptiontradinIQ.
