Call Buyers Ante Up Ahead of GoPro, Inc. (GPRO) Earnings

GoPro Inc (GPRO) has made some big post-earnings moves in the past


Published on Feb 5, 2015 at 2:20 PM
Updated on Apr 20, 2015 at 5:32 PM

Ahead of tonight's fourth-quarter earnings report, GoPro Inc (NASDAQ:GPRO) is sitting 3.5% higher at $53.66 amid news of a forthcoming TV channel on the streaming Roku platform. Options traders are responding, with calls crossing at double the usual intraday rate, and the stock's 30-day at-the-money implied volatility up 8.6% to 86.6%, as volatility expectations ramp up ahead of this evening's quarterly results.

Digging deeper, buy-to-open activity is detected at the weekly 2/6 55- and 60-strike calls, which are GPRO's two most popular options this afternoon. In short, these speculators expect today's momentum to extend through tomorrow's closing bell, when the weekly series expires.

The call buying also signals confidence ahead of earnings. Looking back, GPRO has reported quarterly results just twice since going public in late June. In the session subsequent to its Aug. 1 release, the shares plummeted 14.6%; however, one day after the stock's late-October report, the shares were up 13%.

Today's call-focused session is business as usual for GPRO. The equity's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 3.16, with long calls more than tripling puts. However, with 28.6% of GPRO's float sold short, a portion of these bullish bets --especially at out-of-the-money strikes -- may have been initiated by short sellers seeking an upside hedge.

On the charts, GoPro Inc (NASDAQ:GPRO) has been stair-stepping its way lower since topping out at a record $98.47 in early October. However, with today's move northward, the shares are on pace to close above their 10- and 20-day moving averages -- which appear to be forming a bullish cross -- for the first time since Jan. 6.

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