GoPro Inc (GPRO) Option Traders Eye an End-of-Week Pop

Call volume is accelerated on GoPro Inc (NASDAQ:GPRO)

by Josh Selway

Published on Mar 3, 2016 at 12:29 PM
Updated on Jun 24, 2020 at 10:16 AM

Wearable camera stock GoPro Inc (NASDAQ:GPRO) is popping today, though the specific catalyst is unclear. However, the timing of GPRO's upside move may have something to do with business partner Ambarella Inc (NASDAQ:AMBA), which is scheduled to report earnings after the close today. Other traders are pointing to GoPro's recent investment in video editing software as another positive sign. Regardless, the shares are up 6% today at $13.80, and options traders are getting in on the action. 

Call volume is running at 1.6 times the usual intraday rate, with the weekly 3/4 strike grabbing much of the attention ahead of tomorrow night's expiration. Specifically, traders are buying to open positions at the weekly 3/4 13-, 13.50- and 14-strike calls. In other words, they're betting on extended gains from GPRO through week's end. 

While call buying usually dominates on an absolute basis, put buying has increased in popularity in recent sessions. Specifically, GPRO's 10-day put/call volume ratio of 0.62 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is higher than 65% of all readings from the past year. Just five days ago, this ratio rested at 0.33.

No matter how these traders are betting, it's important to know that GPRO has tended to make outsized moves during the past year, compared to what the options market has priced in. This is evidenced by the stock's Schaeffer's Volatility Scorecard (SVS) of 97. 

On the charts, GoPro Inc (NASDAQ:GPRO) has been muscling higher since hitting an all-time low of $9.01 on Feb. 4. Specifically, the stock has soared over 53% since then, ushered higher by its 20-day moving average -- and it's on track for its first close north of the 50-day trendline since mid-August. From a contrarian perspective, a capitulation among option bears could add fuel to GPRO's fire.

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