Option Activity Pops as GoPro, Inc. (GPRO) Gets Smacked By Apple Inc.

GoPro Inc (GPRO) options are trading at a faster-than-usual clip today

by Karee Venema

Published on Jan 13, 2015 at 1:25 PM
Updated on Apr 20, 2015 at 5:32 PM

GoPro Inc (NASDAQ:GPRO) has plunged 10% today -- and found a place on the short-sale restricted (SSR) list -- on news that Apple Inc. (NASDAQ:AAPL) has been granted a patent for a camera system similar to the one GPRO develops. In GPRO's options pits, volume is trading at 1.8 times the average intraday pace, and short-term contracts are in demand. Specifically, all 10 of GPRO's most active options expire in the next six weeks.

The equity's January 2015 60-strike put has seen the most action, but according to data from the International Securities Exchange (ISE), a number of these positions are being sold to close ahead of Friday's expiration. Looking down the list, GPRO's January 2015 55-strike call has received notable attention, with signs suggesting a mix of buy- and sell-to-open activity.

By buying to open the calls, traders expect GPRO to bounce back above $55 by week's end -- when front-month options expire. Meanwhile, those selling to open the calls are betting on the level to hold as a short-term ceiling.

From a wider sentiment perspective, option bulls have been active on GoPro Inc (NASDAQ:GPRO) in recent weeks, despite the stock being down 48% from its Oct. 7 all-time high of $98.47 to trade at $51.07. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.48 calls for every put during the past 10 sessions. With nearly 30% of the equity's float sold short, though, a portion of this call buying may be a result of shorts hedging against any unexpected upside.


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