GoPro Inc (GPRO) Options Red-Hot Ahead of Big Reveal

GoPro Inc (NASDAQ:GPRO) options are red-hot ahead of today's big Karma drone reveal

Sep 19, 2016 at 10:49 AM
facebook twitter linkedin

Wearable camera maker GoPro Inc (NASDAQ:GPRO) is generating excitement this morning, as anticipation builds ahead of the company's highly anticipated Karma drone reveal, which will live-stream on GoPro's website at noon ET today. In the meantime, GPRO options are red-hot, crossing the tape at four times the average intraday rate, while the shares sit 4.8% higher at $15.67.

Roughly 19,000 GPRO calls changed hands so far-- that's more than 100% of the stock's average daily call volume. Likewise, 19,000 GPRO puts have traded thus far, over 250% of GPRO's average one-day put activity. Early indications suggest GPRO options volume is on pace for the 99th percentile of its annual range, meaning options have been more popular just 1% of the time during the past year.

It looks like some speculators may be cashing in their chips ahead of the event, selling to close their in-the-money weekly 9/23 15-strike calls. Meanwhile, possible buy-to-open action has been spotted at the November 16 put. By purchasing the puts to open, the buyers are hoping GPRO reverses course within the next couple of months.

From a broader sentiment standpoint, GPRO calls have been all the rage. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 2.33 is higher than 98% of all other readings from the past 12 months. Meanwhile, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.71 is in the 25th percentile of its annual range, suggesting near-term options players are more call-heavy than usual right now.

Of course, some of the recent call buying -- particularly at out-of-the-money strikes -- could be attributable to short sellers looking for a hedge of their own. GPRO short interest accounts for a whopping 36% of the stock's total available float, representing more than a week's worth of pent-up buying demand, at GPRO's average pace of trading.

Whatever the motive, GPRO has been kind to option buyers in the past. The stock's elevated Schaeffer's Volatility Scorecard (SVS) of 83 indicates the stock has tended to make outsized moves on the charts during the past year, relative to what the options market has priced in.

On the charts, GoPro Inc (NASDAQ:GPRO) has rallied nearly 82% since touching an all-time low of $8.62 in mid-May, and seems to have found an ally in its 200-day moving average. Should the company's product reveal blow past expectations, or should drone demand be "huge this holiday," as some analysts predict, a short squeeze could add fuel to GPRO's fire.

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.

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners