Red Bull Partnership Energizes GoPro Inc (GPRO) Option Bulls

GoPro Inc (NASDAQ:GPRO) call options are trading at an accelerated rate following the company's partnership with Red Bull

by Josh Selway

Published on May 24, 2016 at 10:43 AM
Updated on Jun 24, 2020 at 10:16 AM

Camera specialist GoPro Inc (NASDAQ:GPRO) has been a long-time underperformer on the charts, but today, the stock is rallying. Specifically, GPRO is up 5.4% at $9.75, on news of a partnership with energy drink giant Red Bull. As part of the deal, Red Bull will use GPRO cameras in all of its footage, while Red Bull will receive equity in GoPro. GPRO stock volume is surging as a result, while call options are also trading at a rapid-fire pace. 

To be more specific, GPRO calls are trading at three times the average intraday rate, more than tripling the number of puts that have crossed. For the most part, traders are taking a short-term approach, with much of today's activity taking place at the weekly 5/27 10- and 11-strike calls. It appears buy-to-open activity is taking place at both strikes, meaning traders are betting on GPRO to rally above $10 and $11 by the end of this week, when the options expire. 

This activity isn't unusual though, as call buying has outpaced put buying during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, this could be a result of short sellers hedging against an unforeseen rally, as GPRO's short-interest ratio stands at 3.50. 

As alluded to, GoPro Inc (NASDAQ:GPRO) has become known for its disappointing technical performance. By the numbers, the stock has dropped more than four-fifths of its value in the past 12 months, with a rally attempt in April quickly stopped short by its 100-day moving average. Even more recently, GPRO sold off post-earnings for the fourth consecutive quarter. 

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