We are detecting a huge surge in options buying in GoPro (NASDAQ: GPRO) today. Last week on Thursday we saw a similar surge in options activity in AIG and the stock had a surprising drop on earnings the next day. GPRO already reported earnings last week so an earnings report surprise is not going to move the stock anytime soon, but options traders are indeed positioning themselves with the expectation that the shares are going to make a big move.
For instance, the August 17 calls with a strike price of $7.50 have already traded 7,461 contracts. These options began the day with an open interest of 123 so this is a massive jump in trading volume. These options are trading with an implied volatility of over 58% so the people buying them are expecting a massive move in the stock to occur between now and then.
Take a look at the chart of GPRO and you will see that it went from $5.60 to hit $7.05 in a brief amount of time last month. In April the stock was $4.50 so it has made big moves in the past two months. Options buyers today in a sense are making a bet that big moves will continue.
But will the stock just keep going up and up? It has actually fallen a lot in the past few years and is in an overbought condition right now. We expect that it would need to consolidate it’s recent gains for several weeks before it would go above $7.50 for any sort of sustainable move. However, there is no denying that today many people are betting that it will move above $7.50 very soon.