1GPRO trade ideas
GPRO MonthlyFirst green candle setting up. Bottom of trend. Company about to release new drone technology. This could move to 30 fast
I believe that GPRO is a buy. It's bottoming out.I believe that GPRO is a buy and is at it's bottom area. I think it will reverse and start climbing out. especially with all the new stuff they've been working on for the past year! Looking forward to seeing this back up in the $40's range :)
Update..At the bottom of the Support Area.....No signs of any Positive Price Action.....
On "Hurry up and Wait Mode"
$GPRO "Mapping out the Probabilities"Gpro will show its hand very soon. A possible rally up to the gap will set the stage for what is to come next.
(D) Near term short.Gap down has brought price to lower trend line of bullish channel. OBV has weakened from last weeks price action. Also price is below all three (Green, Orange, Red) MAs.
GPRO consolidating for break outGRPO is ready to break out of the upper channel. The price is consolidating for the last two weeks or so. It tried to do the same in October but failed miserably. If it succeed this time expect consolidation above the channel line after break out and then upward movement.
GPRO: Ready for upside movementOnce it breaches the inner channel, it will bounce to 27 - 28 where it will face some resistance.
OPTIONS TIP: WHAT TO LOOK FOR IN A COVERED CALL SETUPI've been looking at quite a few of these setups lately, so thought I'd post a bit of what I'm looking for in these.
1. Implied Volatility. As a premium seller, high implied volatility rank and high implied volatility in an underlying are my general signals as to whether to consider a trade. This is because higher implied volatility results in richer premium, and you want to sell richer premiumed short calls in these setups to reduce your cost basis more dramatically or, at the very least, reduce it to such an extent that your breakeven for the setup is favorable to a profitable outcome.
2. Price. This is a purely subjective element in my decision-making process. The question always is: "How much do I want to devote in buying power to this trade?"
That being said, there is obviously less risk as a general matter when you put on a covered call in CHK, for example, as compared to CMG. If CHK goes to "0", for example, I'm only out $445 maximum (although I do keep the premium for the short calls sold); for CMG, I'm out $49500 (minus the value of the short call premiums collected). This is the very reason why I like to restrict these plays to underlyings that are valued $20 and less. Even if the underlying goes totally belly up, I'm not left on the street corner with a tin can ... .
3. Due Diligence. I tend to do far more due diligence with covered calls than I do with short strangle earnings plays. A lot of these covered call plays, after all, are partly attractive because the underlying has been severely battered for one reason or another, and I naturally want to know if there is risk associated with that reason such that a covered call doesn't make sense or poses more downside risk such that I could be in the trade for far longer than I consider ideal.
4. Break Even Metrics. For obvious reasons, having a setup breakeven below some significant price inflection point (52-week low, etc.) presents a more attractive setup than one that is "in the middle of things."
5. Correlation. Various sectors experience heightened volatility at various times. Don't overdo working a particular sector, even though that seems to be the profitable way to go in the short run. Look at all the possible plays and work the most potentially profitable among them.
6. Covered Call Screeners. I do use a covered call screener, but this is largely to "cull the herd" down to some kind of manageable number of plays to examine. These screeners suffer from a number of flaws, not the least of which is the usual suggestion that I go way farther out than 45 days with my short call to take in enough premium to make the play attractive.
7. Profit Taking. I look to take profit intratrade if the entire setup is in profit equal to what I would get if called away for the price of my short strike. If my short strike at some point is nearing worthless, I look to either take it off near worthless or roll it out to capture additional premium and further reduce my cost basis in my underlying position.
GPRO -- COVERED CALL/SHORT STRANGLE IDEASEven though GPRO appears to be in a bit of a consolidative state here, volatility in the underlying remains high, with a currently implied volatility rank of 83 and an implied volatlity of 87. Translation: rich premium to be had.
I currently have a short strangle on, so I'm not going to be putting anything on here, but I figured I'd share nonetheless.
There are two possible setups:
Covered Call
100 GPRO at 18.22
Sell 1 Feb 19th 19 Call
Whole Package: $1718 (meaning your break even is $17.18 per share, excluding fees/commissions)
Max Profit: $182 (if called away at $19).
Short Strangle
Feb 5 13.5/23 short strangle
POP%: 76%
Max Profit: $108/contract
BPE: ~Undefined (Off Hours)
BE's: 12.42/24.08
Notes: GPRO's earnings are currently scheduled to be announced on 2/4, so both setups would run afoul of that. I wouldn't necessarily let that put me off throwing on a trade, but would look to take off the short strangle in particular in profit short of the earnings announcement, just so that my setup wasn't ripped about with earnings related price action.
With the short call in the covered call setup, I would be a little bit more psychologically comfortable straddling earnings, but would look either to roll out the short call in the covered call setup to take advantage of heightened volatility and therefore enriched premium or take the whole setup off at an opportune moment, such as when price breaks 19 ... .
Potential GPRO LongGPRO is diverging from the market even with a huge selloff today... I believe there is some interest in GPRO at these levels because of the huge amount of shares floating short. Potentially a bounce into the $30 area sometime soon.
-Ryan
