Using Options for 1-for-2 Risk/Reward Ratio on UiPath Earnings

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UiPath Inc. NYSE: PATH is the leader in artificial intelligence (AI) powered robotic process automation (RPA) and business process automation (BPA) platforms in the computer and technology sector. A recent MarketBeat Original article by Chris Markoch explores how ARK Investment Management head Cathie Wood is a believer in UiPath since it’s the second largest holding in her Ark Innovation ETF NYSEARCA: ARKK. UiPath benefits from two secular tailwinds: AI and automation. The company is scheduled to report its earnings after the bell on March 13, 2024. The stock has been severely lagging behind AI stocks, with its counterpart, C3.ai Inc. NYSE: AI, forming a strong price gap and breakout on its most recent earnings. Unusually, PATH didn't get much upside sympathy momentum from AI's gap-and-go earnings beat. This leaves investors with 1 of 2 conclusions. Either the market knows something and expects PATH to miss its expectations for EPS of 16 cents and $383.6 million in revenues or lower guidance, or the market has overlooked the potential for a strong quarter. In its last quarter, PATH had a modest earnings beat as shares squeezed up to a high of $26.53 after its earnings report. If PATH should follow in the footsteps of AI and beat and raise its number, then we can consider taking a call debit spread. The daily candlestick chart on PATH illustrates that the gap-fill areas at $22.14 and $20.31 have not been broken since its last earnings report. The daily relative strength index (RSI) is winding up for a bounce through the 50-band.