Pre-Earnings Options Traders Turn Bearish On GoPro Inc (GPRO)

GoPro Inc (GPRO) options traders are uncharacteristically bearish today, just ahead of the firm's earnings report

Jul 25, 2016 at 12:28 PM
facebook X logo linkedin


GoPro Inc (NASDAQ:GPRO) options are running at a rapid pace, as the stock has jumped 2.7% to trade at $11.38. Curiously, put options are at nearly two times the volume expected at this point in the session, ahead of Wednesday night's earnings report. Below, we'll take a closer look at the intraday options action, as well as expectations heading into GPRO earnings.

Diving right in, the most active strike is the in-the-money August 11.50 put, with north of 3,800 contracts on the tape. According to data at the International Securities Exchange (ISE), a good chunk of these options have been bought to open. In other words, traders foresee GPRO reversing lower by front-month expiration, at the close on Friday, Aug. 19.

Perhaps these bearish speculators are counting on another post-earnings sell-off. Looking back eight quarters, GPRO has been lower in the session subsequent to earnings six times, with an average loss of 9.1%. This time around, the options market is pricing in an even bolder 19.6% single-day swing in either direction.

Speaking more generally, expectations in the options pits appear to be extremely high ahead of earnings. In fact, GPRO's 50-day ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio registers at an annual high of 2.11, with long calls more than doubling puts. At the same time, though, short interest has been growing. This introduces the possibility that the recent call buyers are, in fact, short sellers hedging their positions against a post-earnings rally.

As explained earlier, GoPro Inc's (NASDAQ:GPRO) earnings history certainly favors the bears. This is true when looking at the charts, as well. GPRO stock has been an absolute disaster from a technical perspective, shedding more than four-fifths of its value on a year-over-year basis -- even after the shares recently posted their best day in months.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI