GoPro Inc (NASDAQ:GPRO)’s stock is too hot right now. The camera manufacturer, which debuted recently in the capital markets, is witnessing extreme demand of its stock, whether such demandexists for its cameras as well, is a different question altogether. In the last one month GoPro Inc (NASDAQ:GPRO)’s stock is up a spectacular 80%, something that is seen rarely. The only thing that is clear right now is that apart from investors’ interest, the stock is also seeinga lot of interest from traders and GoPro Inc (NASDAQ:GPRO)’s option activity is a testament to that. Tim Biggam, Lead option strategist at TradingBlock was on Bloomberg with his latest strategy on GoPro Inc (NASDAQ:GPRO)’s options.
GoPro Inc (NASDAQ:GPRO) made its all time high today by opening at $70.90 and is up over 118% since its IPO in June, which is making it a current hot favorite among option players. Even though J P Morgan downgraded the stock five days ago, GoPro Inc (NASDAQ:GPRO)’s stock is up by 30%, which is why Biggam is skeptical on the stock and has a bearish strategy on it.
“The stock traded up towards $71 today, did pull back. I kind of like that price action, I am selling an out of money call spread for next week, selling the $72 calls, buying the $73 calls, bringing in about $0.40, that is my potential profit, risking about 60 cents so a one and a half to one kind of trade that GoPro Inc (NASDAQ:GPRO) may not go that much higher,” Biggam said.
Biggam’s strategy on GoPro Inc (NASDAQ:GPRO) is a fairly simple call spread, buying the next week expiry $73 call of GoPro Inc (NASDAQ:GPRO) and selling the same week expiry $72 calls, whether the trade will make money or not, one will only know by next week.