Volatile Trading Could Be Ahead for GoPro, Dropbox Stocks

Put buying has been popular on GPRO and DBX before earnings

May 8, 2019 at 10:48 AM
facebook twitter linkedin


Volatility expectations are a huge part of options trading, so we're constantly looking for stocks that could make huge moves -- or fail to live up to Wall Street's lofty volatility expectations. With this in mind, two names options traders should pay attention to this week are GoPro Inc (NASDAQ:GPRO) and Dropbox Inc (NASDAQ:DBX), as both companies are set to report earnings after the close on Thursday, May 9.

For GPRO, the options market is pricing in a 24% swing for the session after earnings, which is obviously notable in its own right, but especially when you consider that's more than double its average post-earnings move of 11.3% from the past two years. Last year at this time the stock popped 9.9% after earnings.

Digging deeper into the options data, the 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.51 and ranks in the 89th annual percentile, showing an unusual demand for long puts over calls. GoPro shares were last seen trading at $6.25, putting them right below the 50-day moving average.

Turning to DBX, options traders are pricing in a 11.9% swing for Friday's trading, compared to just a 5.9% post-earnings move following the company's four earnings releases since going public. Last quarter, the stock dropped 8.4% the day after reporting.

Put buying has also been hot on Dropbox, as its 10-day put/call volume ratio at the ISE, CBOE, and PHLX comes in at 1.19, ranking in the 95th annual percentile. DBX shares were last seen at $23.62, consolidating below the recently formed 200-day moving average.

 

 

 

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners