GoPro Inc (GPRO) Call Buyers Bet On Big Friday Finish

GoPro Inc (NASDAQ:GPRO) is higher today on a strong earnings reaction for chip supplier Ambarella Inc (NASDAQ:AMBA)

by Karee Venema

Published on Jun 3, 2016 at 9:39 AM

GoPro Inc (NASDAQ:GPRO) has jumped to its highest level since early May out of the gate, following a strong earnings reaction for chip supplier Ambarella Inc (NASDAQ:AMBA). The positive price action comes as a welcome surprise for GPRO stock, and could have bullish options traders breathing a sigh of relief.

Specifically, call buying has been picking up speed in GPRO's options pits of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio has jumped to 2.04 from 1.57 over the past two weeks. Plus, the current ratio ranks in the 62nd annual percentile, meaning long calls have been initiated at a faster-than-usual clip relative to long puts.

This call-skewed trend is evident among the short-term crowd, as well. In fact, GPRO's Schaeffer's put/call open interest ratio (SOIR) of 0.77 rests below 75% of all comparable readings taken in the past year. In other words, speculative players are more call-heavy than usual toward options expiring in three months or less.

Yesterday, calls outpaced puts by a more than 2-to-1 margin, and the stock's weekly 6/3 series was in high demand. Most active was the 11-strike call, where it looks as if some of the activity was of the buy-to-open kind. If this is indeed the case, call buyers bet on GPRO to breakout above $11 by tonight's close, when the weekly series expires.

At last check, shares of GoPro Inc (NASDAQ:GPRO) were just shy of this critical mark -- up 0.5% at $10.77. Longer term, the stock has struggled to pare its 82% year-over-year deficit, most recently running out of steam near its descending 30-day moving average. Regardless of where GPRO stock settles tonight, call buyers can rest easy knowing their losses are limited.

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