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Options Radar: Microsoft Corporation, GoPro, and SPDR Gold Trust (ETF)

Reviewing notable options activity on Microsoft Corporation, GoPro Inc, and SPDR Gold Trust (ETF)

by 7/14/2014 2:00 PM
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Three names seeing notable option activity today are tech titan Microsoft Corporation (NASDAQ:MSFT), wearable camera maker GoPro Inc (NASDAQ:GPRO), and exchange-traded fund (ETF) SPDR Gold Trust (ETF) (NYSEARCA:GLD). Here's a look at how today's option traders have been placing their bets on these three names.

  • Microsoft Corporation (NASDAQ:MSFT) was last seen 0.7% higher at $42.40, after earlier notching a 14-year peak of $42.45. Despite the stock's quest for new highs -- or encouraging data from IDC -- MSFT puts are flying off the shelves at a faster-than-usual clip today. Specifically, it looks like speculators are buying to open the July 42 put, amid expectations for MSFT to backpedal beneath the strike by the end of the week, when front-month options expire. This skepticism is echoed on Wall Street, where just 10 out of 23 analysts deem the blue chip worthy of a "buy" or better rating. Furthermore, short interest spiked 19.4% during the past two reporting periods. Should MSFT extend its uptrend, or should the company report stronger-than-expected earnings next Tuesday, a mass exodus of bears could add fuel to the equity's fire.

  • GoPro Inc (NASDAQ:GPRO) is 4.5% lower at $37.11, after a weekend Barron's column waxed pessimistic on the Wall Street freshman. The stock's short-term options are in demand, as its 30-day at-the-money (ATM) implied volatility (IV) touched an all-time high before pulling back 2% to 75%. Puts are outpacing calls by a 2-to-3 margin, and are trading at nearly twice the average intraday pace. However, most of the action appears to be of the neutral-to-bullish variety, with sell-to-open activity detected at the July 35 and 37 puts. By writing the puts to open, the sellers expect GPRO to remain north of the respective strikes through the end of the week, which represents the options' lifetime. In this best-case scenario, the puts will expire worthless, allowing the sellers to retain the net credit. However, if GPRO breaches the strike -- the stock has fallen as low as $36.10 today -- the sellers could be assigned, and losses could add up.

  • Finally, the SPDR Gold Trust (ETF) (NYSEARCA:GLD) is 2.4% lower at $125.71, as the ETF follows gold prices into the red. GLD's 30-day ATM IV has popped 7.8% to 13%, and intraday options volume is accelerated on both sides of the fence. "Vanilla" bears seem to be buying to open the July 125 put, amid expectations for GLD to breach the strike by Friday's close. The October 135 call is most active, however, with most of the action of the buy-to-open variety. The buyers are either betting on GLD to muscle atop the $135 level -- which would mark a year-to-date high -- or they're hedging their bearish bets. Short interest on GLD rose more than 20% during the past two reporting periods, so today's affinity for out-of-the-money calls could be attributable to skeptics seeking short-term insurance.


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