GoPro Inc (NASDAQ:GPRO) has finally turned a corner.
And it’s about time. Spectators like myself have been tiring of its relentless descent.
Six weeks ago I couldn’t come up with any reasons to consider buying the stock, now I have a handful of them.
GoPro’s turnabout was aided by its latest earnings announcement which boosted the shares 10% overnight last week. To be fair, GPRO was already on the mend with improving price action ahead of its quarterly report. The earnings gap was simply the exclamation point at the end of a classic trend reversal.
Allow me to chronicle the recent GPRO stock recovery with the following price chart.
GoPro’s recent uptrend has lasted long enough to turn both the 20- and 50-day moving averages higher. Such a bullish combo hasn’t been in place since last October. Look how consistently buyers have been showing up to defend the 20-day moving average on each and every pullback.
Further proving the bulls’ fortitude is the recent gap fill. Strong stocks typically find support once an up gap is filled as those who missed the overnight profits look to buy-in now that the stock has returned to the scene of the crime.
In true bullish fashion GPRO buyers came out in force on Wednesday right as the gap filled. Thursday’s pop confirmed the pivot formation signaling a new upswing is upon us.
If you were looking to buy the next dip in GPRO, now’s as good a time as any.
Embrace the Odds with GPRO Bull Put Spreads
Sell the Jun $43/$39 put spread for 57 cents credit. Consider it a bet that GPRO stock remains above $43, which is certainly should if the new-found uptrend continues.
The maximum reward is limited to the initial 57 cents and will be pocketed if the puts expire out-of-the-money.
The maximum risk is limited to the distance between strikes minus the net credit, or $3.43, and will be lost if GPRO tumbles below $39. To limit the loss, however, you could exit if GPRO falls to the short strike of $43.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
