Unusual Options Activity: GoPro (GPR)

Traders are betting on a big move higher in GoPro (GPRO). The July 2021 $5 calls just saw over 2,500 contracts trade, a 24-fold surge in volume over the prior open interest of near 100 contracts.

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  • Expiring in 291 days, the bet is that shares will rally over 10 percent from their current price near $4.25. The call buyer paid about $0.84, or $84 per contract, on average.

    Shares of the “selfie stick” company will need to move over 25 percent higher in the next nine months to move in-the-money. While that may sound like a stretch, shares put in a 52-week high back in August around $5.60, so it’s possible that the next rally higher moves the share price over $6.00. And any surprising earings beat could lead to an even bigger move from there.

    Action to take: The July 2021 calls are inexpensive bet on a volatile company. If the share price can rebound, these options should pay off handsomely.

    That’s the kind of low-risk/moderate reward return that makes sense with out-of-the-money call options. And with plenty of time to play out, it’s a bet worth making now, as the time premium will take some time to decline.

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  • It’s unlikely that shares will, say, double in the timeframe of the option, so traders should look for low-triple-digit returns on the option.