Puts Hot as Gogo Inc (GOGO) Takes Flight

Gogo Inc (NASDAQ:GOGO) is trading higher today, after the company's CEO bought 50,000 shares

Aug 9, 2016 at 3:37 PM
facebook twitter linkedin

Tech stock Gogo Inc (NASDAQ:GOGO) is soaring today -- up 6.2% at $11.28 -- after CEO Michael Small bought 50,000 shares in the in-flight Wi-Fi firm. Nevertheless, nearly 2,500 puts have crossed on GOGO stock so far today -- 10 times what's typically seen in the security's lightly traded options pits, and in the 92nd annual percentile.

Most active by a mile is GOGO's September 11 put, where it looks like new positions are being purchased. If this is the case, the expectation is for GOGO to retreat back below $11 by the close on Friday, Sept. 16 -- when the back-month options expire. Regardless of where the stock settles, though, the most the put buyers stand to lose is the initial cash outlay.

Widening the sentiment scope reveals put buyers have been more active than usual toward GOGO. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.85 ranks higher than 75% of all comparable readings taken in the past year.

This skepticism isn't confined to the options pits, either. Although short interest dropped 15.8% in the two most recent reporting periods, it still accounts for nearly 38% of GOGO's available float. In fact, it would take close to a month to cover all of these bearish bets, at the stock's average daily pace of trading.

Technically, the stock has done little to draw optimists to the table. Year-over-year, the shares have surrendered more than 35%. Plus, today's surge is running out of steam in the $11.40-$11.50 neighborhood -- a region that contained Gogo Inc's (NASDAQ:GOGO) late-May rally attempt.

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.

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners