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Free Earnings Trade of the Week: GoPro, Inc. (GPRO) – Reports After the Markets Close On 11/3/16

GoPro, Inc. (GPRO) is scheduled to report earnings after the markets close on Thursday, 11/3/16.

Last quarter, the stock had the following price movement after reporting earnings:

Jul 28, 2016

12.15
13.28
11.75
13.02
24,145,000
13.02

Jul 27, 2016

11.47
11.83
11.42
11.57
10,651,700
11.57

The Implied Volatility on the weekly at-the-money strike price is an extremely high 401. This is very rare. Compared this number to the November 2016 at-the-money strike price of 113, which is still high, but there’s still a huge discrepancy here. If the stock make a similar move as to what it did last quarter, the trade and strategy I am using here, the Neutral Calendar Spread, will be very profitable immediately. The price is excellent to place this trade, as well, with weekly options available. 9/10.

Here is how to place this trade:

Entered Trade

Sell -75 GPRO NovWk1 12 Call

Buy 75 GPRO Nov16 12 Call

Requirements

Cost/Proceeds
$750.00
Option Requirement
$0.00
Total Requirements
$750.00
Estimated Commission
$187.50

NBBO
gpro-ncs-11316 0.06 – 0.13. Try to pay 0.10 or less for this trade. At a maximum, pay up to 0.11. See the attachment for the profit/loss chart. I will post the price to close this position out tomorrow morning right before the opening bell.

Update 1: 9:22 am EST, 11/4/16 – Pre-market, the stock is down about $2.00/share. This is close to what I expected, so I am anticipating the stock to recover off this low. I am placing the STC (net credit) at 0.30 for now, and will update any changes to this here.

Update 2, 10:07 am EST – price to close this trade out (net credit) now at 0.25.

Update 3: 10:42 am EST. Position closed at 0.27. Paid 0.12.

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