Market Overview

Jim Strugger's Options Strategy For Yelp


Shares of Yelp Inc (NYSE: YELP) have seen a continuous decline since September. In the last six months, the stock has lost more than 30 percent on the back of concerns that the company’s monetization strategy is not working. However, some analysts feel that the correction has ended and the shares will rebound strongly when the company announces its next quarterly results in February.

Among these bullish analysts is Jim Strugger, Derivatives Strategist at MKM Holdings, who was recently on Bloomberg to discuss the outlook for Yelp and share his option strategy for the stock.

Long On Yelp

Strugger began, “So, Yelp, we want to be long [on] this.”

He explained that since March the stock has been down more than 40 percent. “We want to buy 57.5, 67.5 call spreads, costs about $2.75. Again nice long directional exposure without really putting that many chips on the table,” Strugger said.

Related Link: Yelp Spikes 2.5% Amid Positive Comments From MKM Partners

Yelp's Expected Earnings

On what kind of earnings to expect from Yelp, Strugger said, “We cover Yelp via Rob Sanderson, he is our Internet analyst, he thinks the stock is really misunderstood -- they have been ramping their existing markets, investing a lot in new markets. The monetization there has been very impressive, but the market really questioning the growth of the local businesses they have signed up over the last couple of quarters.”

He continued, “We see significant revenue growth and margin expansion in the near future and that will continue for years. So, really, very positive story in our view, not in the market’s view; hence we want to get long here.”


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