Now, for the million-dollar question: how in the world does that make any sense? It doesn’t until you look at the quantitative data.

First, let’s go over the fundamental reasons why LCID stock has performed so poorly — and why some traders might view Lucid as so bad, it’s good. Obviously, it’s impossible to ignore the EV manufacturer’s horrific financial disclosure for the first quarter, where it suffered its biggest revenue miss in more than four years. Also, the suspension of full-year guidance was icing on the bear cake.

Pouring salt on open wounds were production problems with the Gravity SUV. While the underlying issue was reportedly solved, the matter further represented an example of Lucid struggling to scale manufacturing efficiently. As well, you have the chokepoints of persistent losses and ugly margins. Basically, there hasn’t been a whole lot to be excited about when it comes to LCID stock.

And yet, Lucid isn’t without merits. Some of the most speculative traders appear to be focused on Uber Technologies (NYSE: UBER) expanding its partnership with the EV maker. Moreover, Saudi Arabia continues to provide significant financial support. In addition, production of Gravity continues to move forward despite the hiccups.

Sure, the equity market is clearly focused on the losses, production issues and the guidance withdrawal. However, call buyers (the options speculators) appear to be equally focused on the positives. Because so much bad news is baked into LCID stock, it arguably wouldn’t take much to spark a turnaround, no matter how brief.

Plus, with the calls being nominally cheap, there’s almost a nihilistic attitude toward Lucid stock. Yes, there’s risk — but the upside potential is gargantuan.

Volatility Skew Reveals How the Smart Money is Approaching LCID Stock

One of the best pieces of evidence regarding the above assertion comes from the volatility skew. By definition, the skew represents implied volatility (IV) across the strike price spectrum of a given options chain. Since IV reflects the pricing potential of the selected strike, sophisticated traders attempt to cover the underlying implied move.

Think of the volatility skew as an insurance market. On any given day, a popular security is likely going to move up or it’s going to move down. Options traders, especially the pros that are handling massive funds, must decide which trajectory is more likely — and subsequently hedge against that risk.

Typically, a skew will feature put dominance on the left-side tail, thus providing insurance against downside movements. However, call dominance tends to be the order of the day on the right side, which allows traders to lever up rallies. In this manner, sophisticated players make sure they’re not caught out, either with a sudden correction or a blistering blowoff.

However, the skew for Lucid stock (for the June 26 expiration date) is rather unique. As expected, put dominance exists on the left-side tail, implying a prioritization of risk mitigation. With LCID stock losing about 78% over the past 52 weeks, that’s a smart play — I’d go so far as to say it’s the only play.

But the revealing part comes from the right side. As the strike price rises, call dominance becomes more prominent. Essentially, the skew for LCID stock is convexity-oriented. Yes, it’s obvious that traders don’t want to be caught with their pants down if Lucid tumbles. Yet they also don’t want to be walked in on if shares skyrocket.

And that’s the vexing problem with Lucid stock. I call it a two-true outcome trade — either it’s going to strike out or it’s a homerun.

Triangulation Reveals an Intriguing Narrative

If you were to buy and hold LCID stock for a 10-week period, the chances of the position being profitable are extremely limited. We’re talking about an exceedance ratio — whether the stock rises above the starting point — of 27.8%. Nominally, the forward distribution is awful. Assuming a starting price of $5.84, you’re looking at LCID landing between roughly a median price of $4.50 and $6.25.

The saving grace here is the current quantitative sequence. In the past 10 weeks, Lucid stock printed only two up weeks, thereby leading to a downward slope across the period. Under this 2-8-D signal, the 10-week forward distribution shifts positively, potentially landing between $5.30 and $6.30. Notably, the exceedance ratio pops to 60%.

Now, is that enough justification to buy LCID stock? I would hesitate to rely purely on the inductive model above because of the two-true outcome situation. Here, using median pricing calculations is deceptive because Lucid is likely to jump to extreme highs or fall to extreme lows. When you take the median of these extremes, you get the middle value — but this value is really an artifact.

With such robust mobility in LCID stock, you’re not likely to come across the middle value. So, why are sophisticated traders buying far out-the-money (OTM) calls? It probably just comes down to the obvious point: they’re cheap.

Let’s say you bought the 7.00/8.00 bull call spread expiring June 26. If LCID stock rises through the $8 strike at expiration, you earn a maximum payout of roughly 456%. The net debit for this spread is only $18. History has proven that $8 is reachable given how much Lucid moves.

Unfortunately, the opposite is also true: LCID stock is just as liable to falter and land flat on its face. So, what’s interesting here is that the smart money — even when acknowledging the risks — is willing to take the shot.

Ultimately, if you have some stupid money lying around, you could consider a what-the-heck trade. But anything other than that is a ridiculous gamble.

Still, it’s possible that investors could have been asking the wrong question. Consider the sport of football. Let’s say that someone asked, “What is the probability that the next play is a passing play (as opposed to a run)?” There are actually two answers, and they’re both legitimate.

Over the course of an NFL season, a team will choose to pass on average between 60% to 65% of the time. So on any given play, this range would be the “correct” answer. However, this stat is only true in the aggregate sense. From a tactical perspective, this knowledge really isn’t that useful.

Indeed, the “real” answer — the useful answer — is that it depends on the situation. If it’s late in the fourth quarter and the offense is behind, the next play is almost certainly going to be a pass. In other words, football strategy operates under the Markov property: the future state of a system depends only on its current state.

As it turns out, quantitative analysis is gaining popularity among options traders for utilizing this thought process to extract alpha.

What is Quantitative Analysis for the Financial Markets?

At the core, quantitative analysis is the study of past price behaviors to extract probabilistic insights, with the ultimate aim of securing a profitable trade. On the surface, the quant approach appears to be identical to technical analysis. However, the key difference is falsifiability. A quant assesses the market through a logic-based system in such a manner that other practitioners of the discipline can perfectly duplicate the calculated results.

With technical analysis, the old joke is that two market technicians can look at the same chart and deliver five different perspectives. While somewhat facetious, the meme points to a lack of falsifiability within the technical methodology. For example, when a security prints what appears to be a head-and-shoulders pattern, no official arbitration process exists to verify the validity of the signal.

Another critical issue is that technical analysis tends to be divorced from standard statistical methodologies. Even if we granted the legitimate existence of a head and shoulders in a particular price chart, the signal is almost always treated as a sample size of one. Quite damningly, the historical implication of the pattern is tied to other stocks flashing the head and shoulders, not the security at hand.

In effect, technical analysts are depending on chart patterns that apparently work in other stocks and juxtaposing those past analogs onto a different security. Under the quantitative methodology, such slippage does not occur. Unless otherwise specified, an empirical analysis is conducted strictly on the security in question.

Now, what makes quantitative analysis especially suitable for options trading is that the methodology deals with causality, whereas technical analysis largely focuses on correlation, especially correlation in motion (which is why so many technical indicators are based on moving averages). A quant looks for structural clues that may tip off where the next move may head.

In contrast, a technical analyst might look at the running back’s pre-snap routine and infer what the next play might be. To be sure, some technicians might have a personal gift for reading the market. However, from an empirical perspective, the quantitative analyst observes the actual structure of the play, making the process much more consistent and reliable.

Extracting Nuanced Alpha from UBER Stock

On any given 10-week period, UBER stock would likely land between $84.50 and $91 (assuming a spot price of $86.19, Wednesday’s close). Across multiple trials, the probability density would likely peak around $86.50, indicating a modest upward bias, consistent with the natural behavioral tendency for UBER stock.

However, we’re not interested in trading the aggregate behavior of UBER stock but rather the statistical response to the current quant signal. In the past 10 weeks, UBER stock printed only four up weeks, leading to an overall downward slope. Ordinarily, this setup would seem risky to outside observers, as it would appear that the bears are in control of the market.

Interestingly, when UBER stock is lined up in this 4-6-D (four up, six down, downward trend) sequence, the forward 10-week returns are little changed from the aggregate response, with outcomes likely to land between $84 and $91. But what does change is the rate of probability decay.

Between $87.50 to $91, the rate of decay under 4-6-D conditions is shallower or less concave than the decay seen in the probabilistic mass of baseline or aggregate behavior. Because of the gentler decay, traders responding to the 4-6-D sequence may be more aggressive with their options strategy than they otherwise normally would be.

With this dynamic in mind, aggressive speculators may consider the 87.50/90.00 bull call spread expiring Feb. 20, 2026. This wager involves two simultaneous transactions placed under one execution: buy the $87.50 call and sell the $90 call, for a net debit paid of $115. Should UBER stock rise through the second-leg strike ($90) at expiration, the maximum profit would be $135, a payout of over 117%.

Although an ambitious wager, the breakeven price for the above call spread comes in at $88.65, which is near peak probability density. Therefore, speculators may be able to balance risk exposure while still stretching for a solid payout.

Key Points to Consider for Quant-Driven Approaches

While the quantitative approach may offer unique insights (even advantages) for options traders, no methodology is perfect. Even by observing empirical price structures, a public security can materialize in unexpected ways.

That said, over enough trials, consistent patterns begin to emerge. Therefore, the quant-minded trader bets on these statistical pathways. They won’t always be accurate but generally speaking, stocks tend to trade alongside probabilistically established routes. And in my opinion, this methodology beats guessing based on emotions and vibes.

Aside from the headline numbers, a highlight of the report was Uber’s plans to make strategic investments in technology. Specifically, the ride-sharing giant is partnering with several companies, including NVIDIA Corp. (NASDAQ: NVDA) to develop the infrastructure for its autonomous vehicle development. Uber is also looking to integrate generative AI into its platform.  

The moves are Uber’s way of signaling its commitment to long-term innovation. It’s not hard to make the long-term case that a fleet of autonomous vehicles (AVs) will boost Uber’s bottom line. However, the movement in UBER stock shows that investment comes at a cost.  

The Company is Using a Familiar Playbook 

You have to give him credit, Uber chief executive officer (CEO), Dara Khosrowshahi, said the quiet part out loud. Investing in autonomous vehicles will not show up on the company’s bottom line for some time.  

On the company’s earnings call, Khosrowshahi remarked, “I expect that AVs (autonomous vehicles) won’t be profitable for a few years going forward.” This is a playbook that the company has used multiple times before. That is, introduce a new product and invest in supply and liquidity. In every case so far, consumer demand has followed along. Khosrowshahi believes this time will be no different.  

This is not to suggest Uber is starting from scratch. The company has partnered or invested in over 20 companies around the world. Last month, it announced a deal with Stellantis to deliver at least 5,000 vehicles equipped with NVIDIA’s driverless software.

Uber has set a goal to have autonomous vehicles operating in at least 10 markets by the end of 2026. The company will initially launch in Atlanta, Georgia and Austin, Texas in the United States as well as Abu Dhabi and Riyadh. After that, Uber is targeting locations such as Dallas, Dubai, London, and San Francisco between 2026 and 2027.  

Short-Term Catalysts for UBER Stock

The CEO noted that Uber remains focused on balancing the buildout of its driverless ride-hailing business with profitability and growth. One specific example of that is how the company has expanded its addressable market for delivery, which is now estimated to be $12 trillion.  

Grocery and retail continue to be the primary growth drivers. The company is also innovating on its grocery and retail delivery products, enhancing discovery and conversion for merchants and consumers. The plan is to continue capturing market share in local commerce to further diversify the company’s revenue stream.  

A Strong Report by Most Measures 

Uber delivered strong financial results in the third quarter, underpinned by accelerating growth across its core Mobility and Delivery segments.  

• Gross bookings of $49.7 billion were 21% higher year-over-year (YoY) 

• Revenue of $13.5 billion was 19% higher YoY.  

• Adjusted EBITDA of $2.6 billion with a 4.5% margin on gross bookings.  

Segment Performance and Financial Highlights 

• Mobility: Gross bookings: $25.1B (+21% YoY), Revenue: $7.7B (+22% YoY), Adjusted EBITDA: $2.0B (+24% YoY) 

• Delivery: Gross bookings: $23.3B (+24% YoY), Revenue: $4.5B (+27% YoY), Adjusted EBITDA: $921M (+47% YoY) 

• Freight: Gross bookings: $1.3B (+20% YoY), Revenue: $1.3B (+20% YoY), Adjusted EBITDA: $20M (+100% YoY) 

• Platform Metrics: MAPCs: 17M (+4% YoY), Trips: 3.5B (+18% YoY), Monthly frequency: 6.1 (+18% YoY) 

• Profitability: Adjusted EBITDA: $2.26B (+33% YoY), Adjusted EBITDA margin: 4.5% (up from 4.1% YoY) 

The results highlighted Uber’s continued ability to scale its platform, attract new users, and drive operational efficiency, even with macroeconomic headwinds such as sticky inflation and interest rates that rose quickly and are slower to come back down. 

However, it’s fair to point out that the company failed to beat analysts’ expectations on the bottom line. That was largely due to legal and regulatory charges that offset the company’s strong growth in both rideshare and delivery.  

UBER Stock Looks Fairly Priced but Could Offer Long-Term Value 

Uber’s Q3 2025 results demonstrate the company’s ability to deliver strong, sustainable growth across its core businesses while investing in future opportunities. The robust performance in Mobility and Delivery, coupled with expanding platform engagement and strategic technology partnerships, positions Uber for continued success in a dynamic market environment.  

For investors, Uber’s focus on operational efficiency, user growth, and innovation provides a compelling case for long-term value creation. As the company continues to scale its platform and diversify its offerings, it remains well-positioned to capitalize on emerging trends in mobility, local commerce, and autonomous technology.  

However, UBER stock looks overvalued at this point. It’s up 55% in 2025, but has been settling into a range in the last three months. The stock hit the top of that range before earnings, but it once again acted as resistance. 

Furthermore, analysts are consolidating their price targets around the stock’s 52-week high. The consensus price target of $106.62 gives investors about 13% upside. That may not be enough for growth investors in the short-term, but UBER stock remians a solid long-term play for patient investors who believe the company’s autonomous ambitions will pay off.