Option Bears Pounce On Gogo Inc. (GOGO)

One of Gogo Inc's (GOGO) top executives resigned today


Published on Mar 24, 2015 at 1:49 PM
Updated on Apr 20, 2015 at 5:32 PM

A surprise resignation at Gogo Inc (NASDAQ:GOGO) has the stock sitting on a 4.5% deficit this afternoon. As such, traders are displaying a pronounced preference for puts over calls, with the former more than doubling the latter.

Over half of GOGO's put volume today has transpired at the weekly 3/27 20 strike. All indications suggest buy-to-open activity at this in-the-money contract, as speculators wager on an extended slide south of the round-number $20 level through Friday's close, when the series expires. Based on the put's volume-weighted average price (VWAP) of $0.39, at-expiration breakeven on the trade is $19.61 (strike less VWAP).

This bias toward bearish bets over bullish has been observed for some time on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). GOGO's 50-day put/call volume ratio across those exchanges is 0.48, which outstrips 88% of comparable readings from the last year.

Negativity is also evident among short sellers. Over two-fifths of GOGO's float is sold short, which would take nearly two weeks to cover, at the stock's average trading volume.

As alluded to, Gogo Inc (NASDAQ:GOGO) is facing pressure from the resignation of Chief Accounting Officer Thomas McShane. Despite the equity's intraday losses, the shares have still advanced close to 20% year-to-date to perch at $19.77. Should this longer-term uptrend resume, a capitulation among option bears and/or short sellers could provide a boost to GOGO.

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