Options Run Hot as GoPro Inc, Etsy Inc Hit Lows

Long-term laggards GoPro Inc (GPRO) and Etsy Inc (ETSY) are fresh off record lows

by Alex Eppstein

Published on Jan 11, 2016 at 2:11 PM
Updated on Jun 24, 2020 at 10:16 AM

While the broader market edges higher, not all stocks are in the same boat. In fact, several momentum names -- including Fitbit Inc (NYSE:FIT) -- have hit all-time lows today. Two other stocks notching fresh record lows are mobile camera maker GoPro Inc (NASDAQ:GPRO) and e-tailer Etsy Inc (NASDAQ:ETSY).

At last check, GPRO has plunged 5.3% to trade at $15.33, after earlier panning a nadir of $14.57. This represents quite the reversal for a stock that was at one point flirting with triple-digit territory, less than four months after going public in mid-2014. Fundamentally speaking, GPRO has buckled under the weight of increasing competition, as well as disappointing sales of the company's newest camera models -- though this past holiday season may suggest otherwise.

Separately, the stock has been pressured by mounting levels of short interest, which now account for half of its total float -- though today's losses have it on the short-sale restricted (SSR) list. Elsewhere on the sentiment front, bearish betting has picked up in the options pits. GPRO's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio comes in at 0.58 -- higher than 84% of comparable readings from the past year.

Today, GoPro Inc puts are trading at triple the expected intraday rate, and outstripping calls. Leading the way is the deep out-of-the-money April 11 put, where some buy-to-open action may be taking place.

On the other hand, ETSY calls are being exchanged at six times the typical afternoon rate, despite the stock striking a record low of $7.52 earlier. More recently, the shares were down 10% at $7.54, and have earned an SSR designation. Sparking the sell-off is the expiration of the company's post-IPO lockup period, allowing insiders to dump the stock.

Ahead of today, ETSY calls were already changing hands at a breakneck speed. Specifically, during the past 10 days at the ISE, CBOE, and PHLX, 11.71 calls have been bought to open for every put. To put that number in perspective, the same ratio ended 2015 at just 5.61, meaning the pace of call buying (relative to put buying) has picked up in recent sessions.

At the same time, short sellers have been hitting the exits. During the last two reporting periods, short interest on Etsy Inc has fallen 18.3%. However, 5.3 million shares remain sold short, and would still take over one week to buy back, at average trading volumes.

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