GoPro Inc (NASDAQ:GPRO) reports earnings after the close tomorrow, as the camera maker looks to build off recent bullish analyst attention. Below, we will examine GoPro's earnings history and how options traders are positioning themselves ahead of the event.
At last check, GoPro stock is up 0.7% to trade at $10.41. The equity has pulled back from its most recent high near $12, but the drop was caught by the shares' 100-day moving average, a former level of resistance.
Historically speaking, the stock's post-earnings reactions have been drastic. In August, the security jumped an impressive 19% following its earnings report. Over the past eight quarters, GPRO stock has posted on average a single-day swing of 10.6%, regardless of direction. This time around, the options market is pricing in a much higher 18% move for Thursday's trading. If such a move occurred to the upside, GPRO stock could wind up above the $12 region for the first time this year.
A short squeeze could provide tailwinds for the equity. Short interest has increased by 21.6% during the last two reporting periods to 30.69 million shares, the most since July. This represents a whopping 30% of GPRO's total available float. In the options pits, call buying has accelerated drastically in the past two weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows GoPro with a 10-day call/put volume ratio of 2.81, which ranks in the 75th percentile of its annual range. This is more than double the ratio from Oct. 16. Of course, it's possible that some of this increased call-buying activity could be short-sellers looking to hedge their bets ahead of earnings.