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Most Active Options Update: Gulfport Energy Corporation (GPOR)

Option bears target long-term laggard Gulfport Energy Corporation ahead of earnings

by 8/4/2014 2:53 PM
Stocks quoted in this article:

The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Gulfport Energy Corporation (NASDAQ:GPOR), which is seeing increased put buying ahead of earnings .

Most Active Options Table

Specifically, roughly 1,600 Gulfport Energy Corporation puts are on the tape this afternoon, versus just over 200 calls. What's more, the oil-and-gas stock's 30-day at-the-money implied volatility (IV) has popped 6.1% to 51.8%, indicating elevated demand for short-term options. Most active among GPOR options is the August 47.50 put, where 1,415 contracts have changed hands. The vast majority have done so at the ask price, IV is trending higher, and just 70 contracts reside in open interest at the strike, collectively pointing to buy-to-open activity.

The out-of-the-money puts are being scooped up for a volume-weighted average price of $0.64. Therefore, in order for the buyers to profit, GPOR must be sitting below breakeven at $46.86 (strike less VWAP) at the closing bell on Friday, Aug. 15 -- when the front-month contracts expire. Additional gains will accrue the further south of breakeven the shares are perched at expiration, whereas the most the traders will lose is the initial premium paid, should the contracts be out of the money when they cease trading.

Taking a step back, it's not surprising that someone would bet bearishly on GPOR. While up 2.5% this afternoon to trade at $53.56, the stock has lost 17.8% since its July high of $65.18, and is down nearly 16% in 2014.

Looking ahead, Gulfport Energy Corporation (NASDAQ:GPOR) will report second-quarter earnings after the market closes this Wednesday. Over the past eight quarters, the company has posted just three bottom-line beats, compared to five misses. Also, while the shares have averaged a 2.6% pop in the session subsequent to the aforementioned events, those gains tend to evaporate when extending the time frame out to one week.


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