GoPro Inc (GPRO) Options Pits Divided as Stock Stumbles

GoPro Inc (GPRO) has fallen below its supportive 80-day moving average and the $55 level

by Alex Eppstein

Published on Aug 19, 2015 at 3:21 PM

GoPro Inc (NASDAQ:GPRO) is succumbing to broad-market headwinds today, down 4.6% at $54.81. In fact, the shares are in danger of closing below their 80-day moving average for the first time since late April. This trendline took on significance in early July, when the stock bounced from it en route to a six-month high of $65.25.

As GPRO struggles, its at-the-money August 55 strike has caught the attention of option players. In fact, it is the stock's most active strike, followed by the August 55 put, with a combined volume of more than 9,500 contracts. The call is seeing both buy- and sell-to-open activity, per the International Securities Exchange (ISE). For those purchasing the calls, the goal is for GPRO to reclaim $55 by week's end, when the series expires. For those writing the calls, the expectation is for the strike to serve as a near-term ceiling.

Meanwhile, the August 55 put may also be seeing a mix of buy- and sell-to-open action. If this is the case, the buyers are gambling on GPRO extending its decline south of $55 by Friday night, while the put writers are counting on the strike to act as a short-term floor. The last time the stock settled below the strike was July 15. Delta on the put is negative 0.54, signifying a roughly 1-in-2 chance the option will be in the money at expiration.

Taking a step back, short-term traders have been more put-skewed than usual. GPRO's Schaeffer's put/call open interest ratio (SOIR) of 1.13 indicates put open interest outweighs call open interest among options with a shelf-life of three months or less. The SOIR also ranks in the 63rd percentile of its annual range.

Elsewhere on Wall Street, analysts are pretty bullish toward GoPro Inc (NASDAQ:GPRO). Over two-thirds of brokerages rate the stock a "buy" or better, with not a single "sell" to be found. Also, while 15.4% of the equity's float is sold short, this represents less than one day's worth of trading, at typical volumes.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Stocks Surge During Holiday-Shortened Week
Stocks chugged higher as the government responded to the coronavirus crisis with more funding
Bank Stocks Ease Investors Back Into Earnings Season
Bank stocks will kick off earnings season next week
The Top Lithium Play of 2020
Click to continue to advertiser's site.