The story of last week was under-the-surface weakness in growth stocks, while money rotated into “everything else.” And by week’s end the S&P 500 had lost 0.3%, the Dow fell 0.1%, and the Nasdaq declined by 0.7%.
The Stock – Lyft (LYFT)
Lyft has been playing second fiddle to Uber in the ride sharing industry for years, but after some rough post-pandemic times, the company has been doing well thanks in part to new management (came aboard in 2023) with solid (not spectacular) growth year by year thanks to industry growth, partnerships with some big players (United Airlines, DoorDash, Chase, Alaska Airlines and more recently Baidu) and international expansion (including via a recent acquisition that the top brass says expands Lyft’s total addressable market to 300 million rides annually).
That said, when it comes to investor perception, the trick has been figuring out how a widely expected industry move to autonomous vehicles in the years ahead will play out—but a recent announcement has investors thinking Lyft may be a big player there, thanks in large part to what it sees as its best-in-class fleet management system: Lyft and Waymo (owned by Google and thought by many to be at or near the lead in autonomous driving technology) have extended a partnership to launch autonomous taxis in Nashville, TN next year. Some of that will involve matched ride sharing, but a big part involves Lyft’s FlexDrive management system, which makes sure those driverless vehicles are well maintained (which includes depots, repair centers and handles maintenance, deployment, sourcing and more) and thus minimizes downtime and issues while extending an auto’s life. (Lyft is even building a purpose-built autonomous vehicle facility with charging and service available just for this deal.) The news has many thinking Lyft’s FleetDrive will make it a big player in the industry’s AV future.
As for the here and now, growth is good, with Q2 sales and bookings up in the low double digits while EBITDA lifted a strong 26% and free cash flow came in at nearly 78 cents per share, miles above reported earnings. The top brass sees similar growth ahead, though the stock will surely be affected by any further autonomous deals both here and overseas.
Technical Analysis
LYFT has been hacking around since early 2024, but it looks to have changed character in recent weeks. After a strong initial snapback from its April lows, the stock went dead again, with pullbacks to 14.2 (June) and 13.3 (in August) that left you wondering if the next big move would be down. But LYFT has done exceptionally well since its Q2 report, lifting to multi-month highs earlier this month and then booming to multi-year peaks following the Waymo news. Stop – 18.1
The Covered Call Trade
Buy Lyft (LYFT) Stock at 23, Sell to Open October 23 Strike Calls (exp. 10/17) for $1, or a Net Price of 22 or less.
Static Return: $100 per covered call (4.54%)
Breakeven: 22
Covered Call Return (if assigned): $100 per covered call (4.54%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the approximate Net Price, or 22 or less. (In this case 23 minus 1 = 22. Or another example is you could pay 23.25 for the stock and sell the call for 1.25, which also equals 22.)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
| Stock Name and Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| PureStorage (PSTG) | 77.85 | 83.5 | 64 | October 75 -- $5.90 | $8.50 |
| Kratos Defense (KTOS) | 63 | 89 | 57 | October 62.5 -- $4.90 | $26.50 |
| Cameco (CCJ) | 81.5 | 84 | 74 | October 80 - $5.45 | $6.00 |
| Coupang (CPNG) | 32.45 | 32.5 | 29 | October 32 -- $1.20 | $1.20 |
The next Cabot Profit Booster issue will be published on October 7, 2025.
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