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Amid Continued Rally, GoPro Inc (GPRO) Bulls Pounce

GoPro Inc call buyers are active as the stock continues to cruise higher

by 8/29/2014 10:51 AM
Stocks quoted in this article:

GoPro Inc (NASDAQ:GPRO) is soaring again this morning, up 3.5% to hover near $50.61 -- just a day after rallying 7.4%. In fact, the stock earlier touched a record high of $51.75. Not surprisingly, calls are trading at a fast and furious pace -- at five times the typical intraday volume -- and short-term contracts are being targeted, based on the 9.0% rise (to 62.7%) in GPRO's 30-day at-the-money implied volatility.

The October 55 call has seen notable buy-to-open activity, and with more than 1,700 contracts on the tape, it's GPRO's second most active strike. These out-of-the-money (OOTM) bets are being scooped up at a volume-weighted average price (VWAP) of $1.79, resulting in an at-expiration breakeven mark of $56.79 (strike plus VWAP). North of this level, gains are theoretically unlimited, while risk is capped at the initial premium paid, should the shares be resting below the strike at the close on Friday, Oct. 17 -- when the back-month options expire.

From a sentiment standpoint, short interest on GoPro Inc (NASDAQ:GPRO) is on the rise. In fact, during the two most recent reporting periods, short interest on the equity jumped 30.8%, and now comprises 5.5% of the stock's float.


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