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
Updated on Jun 24, 2020 at 10:16 AM

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.

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