Since finding its mojo last month, GoPro (GPRO) stock has been on a tear. The increasingly popular camera company is up 25% since its post-earnings pullback just last month.
The rapid ascent is somewhat reminiscent of GoPro stock’s post-IPO run when it almost tripled late last year.
With Monday’s pop GPRO was able to bump its head back above the oft-watched 200-day moving average. Since the stock is still in its infancy as a public company, the 200-day moving average only recently even became available to display on the charts. It takes 200 trading days before enough data is accumulated to calculate the long-term average, after all.
We’ve seen heavy participation alongside the rally in GPRO stock. As shown in the accompanying chart a handful of high volume up days have cropped up over the past month hinting at institutional accumulation.
‘Tis another bullish sign, you might say.
So with the GPRO stock now back above all its major moving averages what’s the play?
While the bulls are undoubtedly steering the GoPro ship these days, the real question is whether a low-risk entry is in the offing. And with the stock up a fast 25%, some profit-taking or at least consolidation is in order. After any type of pause we should have a green light for bullish plays.
Grab GPRO stock options on the cheap
A brief glance at GoPro options reveals they are currently being offered up on the cheap. GPRO implied volatility recently descended to a new all-time low near 38%. In layman’s terms, GPRO options are pricing in less volatility over the next month or so than they have at any point since option contracts became available to trade.
Long calls aren’t a bad way to go here. If you don’t mind chasing, you can grab the Jul $57.50 calls for $4.65. The risk is limited to the initial debit. The reward is unlimited.
The alternative would be to wait for some type of pullback in the potentially overheated stock, then pull the trigger on the long call. One potential risk with this approach is that GPRO just keeps chuggin’ higher with nary a dip like it did on its rocketship ride last fall. Sometimes those who wait for the market to come to them get left in the dust.
At the time of this writing Tyler Craig had no positions on any of the aforementioned securities.
