Gogo Inc (GOGO): Bearish Betting Picks Up Ahead of Earnings

Gogo Inc is slated to report earnings next Monday morning


Published on Nov 6, 2014 at 10:11 AM
Updated on Jun 24, 2020 at 10:16 AM

Gogo Inc (NASDAQ:GOGO) lost nearly 2% yesterday, prompting a rush of bearish betting in the stock's options pits. In fact, puts traded at a 79% mark-up to the daily average. What's more, the equity's 30-day at-the-money implied volatility popped 4.2% to 71.8%, signaling elevated demand for short-term strikes.

Digging deeper, the weekly 11/7 16-strike put was GOGO's most sought-after option, followed closely by the December 14 put. In both cases, the vast majority of the volume crossed at the ask price, and open interest increased overnight, suggesting the contracts were largely bought to open. In other words, the traders expect GOGO -- up fractionally this morning at $16.35 -- to descend below the strikes by the respective expiration dates.

Within the lifetime of the December 14 put is GOGO's third-quarter earnings report, due out next Monday morning. The Street is projecting a per-share loss of 26 cents for the in-flight wireless provider. Looking back over the past five quarters, GOGO tends to swing wildly in the session following these events. On average, the stock has moved 4.3% higher during that time span -- though this is partially skewed by a 28.8% gain after last November's report.

So far this year, Gogo Inc (NASDAQ:GOGO) has struggled significantly, losing more than one-third of its value. In recent weeks, however, the stock has been consolidating in the $16.50 neighborhood, just below its 80-day moving average.

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