Call Buyers Blitz Surging GoPro Inc (GPRO)

GoPro Inc (NASDAQ:GPRO) is soaring today, and options traders are responding in kind

by Karee Venema

Published on Apr 13, 2016 at 11:06 AM
Updated on Jun 24, 2020 at 10:16 AM

GoPro Inc (NASDAQ:GPRO) is flying high today, with some speculating the stock could be in the midst of a short squeeze. Nevertheless, GPRO stock is up 12.3% at $13.11, with both stock and option volume docked in the 98th percentile of their annual ranges.

By the numbers, roughly 7.3 million GPRO shares and 41,285 options have traded so far. Call options are clearly outpacing put options, by a ratio of nearly 3-to-1. Most active is GPRO's April 12 call, where it looks as if new positions are being purchased. If this is the case, call buyers expect GPRO to extend today's rally north of $12 through week's end -- when front-month options expire.

This skew toward calls is nothing new in GPRO's options pits, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.27 GPRO call options have been bought to open for each put option over the past 10 sessions. What's more, this ratio ranks higher than 63% of all comparable readings taken in the past year.

Echoing this is GPRO's Schaeffer's put/call open interest ratio (SOIR) of 0.66 -- in the 16th percentile of its annual range. In other words, short-term speculators are more call-heavy than usual toward the stock.

As indicated, though, GPRO has a hefty amount of its shares are sold short. In fact, short interest surged 14.6% in the last two reporting periods, and now accounts for nearly one-third of the stock's available float. It would take almost a week to cover these shorted shares, at GPRO's average daily pace of trading. As such, it's possible that some of the recent call buying is a result of shorts hedging against any upside risk.

Technically, GPRO has been a long-term laggard, down 80% since hitting an annual high of $65.49 in early August. More recently, the equity's 40-day moving average has worked as a magnet for the shares since late March, while today's surge could find headwinds near the equity's overhead 80-day moving average. GoPro Inc (NASDAQ:GPRO) hasn't toppled the latter of these trendlines in intraday action since Aug. 19.

GPRO daily chart

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