GoPro Inc (GPRO) Pullback Draws Put Players

Although GoPro Inc (NASDAQ:GPRO) is testing support at its 80-day moving average today, put volume is accelerated

Oct 24, 2016 at 11:45 AM
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Put volume has swelled on GoPro Inc (NASDAQ:GPRO) this morning, with 15,000 contracts on the tape -- almost double the 7,984 puts that are expected to trade by this point in the session. With the stock slipping on a cautious analyst note from Cleveland Research, options traders are targeting GPRO's short-term trajectory. Specifically, the 10/28 weekly series of options accounts for eight of GPRO stock's 10 most active contracts, with a number of traders eyeing additional losses through week's end.

Drilling down, GPRO's weekly 14.50- and 15-strike puts have seen the most action thus far, where a collective 4,933 contracts have traded. What's more, it looks like there is some buy-to-open activity happening at each strike, meaning speculative players expect GPRO stock to settle the week -- when the short-term options expire -- south of the respective strikes.

Widening the sentiment scope reveals today's accelerated put activity is just more of the same in GPRO's options pits. 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 0.92 ranks just 12 percentage points from a 52-week peak. Simply stated, puts have been bought to open over calls at a faster-than-usual clip.

Echoing this put-heavy backdrop is GPRO's Schaeffer's put/call open interest ratio (SOIR) of 0.99, which ranks higher than 79% of all comparable readings taken in the past year. In other words, GPRO traders are more put-biased than usual among options expiring in three months or less.

This pessimism is seen outside of the options pits, as well. Short interest, for example, jumped 10.7% in the two most recent reporting periods, and now accounts for more than 34% of GPRO's available float. Plus, nearly 63% of analysts covering the shares maintain a "hold" or "strong sell" suggestion.

What's surprising is that there is this much skepticism levied toward a stock that's been on an impressive technical run of late. Since bottoming at a record low of $8.62 on May 19, GPRO has surged more than 64%. Plus, although the security is down 5.1% at $14.17 today, after Cleveland Research suggested GoPro Inc's (NASDAQ:GPRO) tenacity both on and off the charts could be at risk of fizzling, the pullback was quickly contained by GPRO's 80-day moving average. This trendline served as support during a recent slip related to Amazon.com, Inc. (NASDAQ:AMZN). A bigger bounce from here could prompt some of the weaker bearish hands loose, translating into possible tailwinds for GPRO stock.

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