GoPro Inc (NASDAQ:GPRO) had rather successful debut in the US market with stock prices going up by more than 100% 3 months. But post this high, the stock lost the interest of investors and started dropping significantly. GoPro Inc (NASDAQ:GPRO) stock had lost more than 50% of its value since its high back in October. YTD the stock had lost more than 35% of its value. Many investors consider that GoPro Inc (NASDAQ:GPRO) stock has hit the floor. But is there some way to trade this stock and make some profit out of it? Yes there is. Andrew Keene of Keeneonthemarket.com talked on CNBC about his options play to make money out of GoPro Inc (NASDAQ:GPRO) stock.
Keene said that GoPro Inc (NASDAQ:GPRO) stock had a crazy rally soon after its IPO back in June. He pointed out that the stock went up from $30 per share to $96 per share in 3 months, which is very significant growth for a debutant.
Keene said that post its high in September, GoPro Inc (NASDAQ:GPRO) stock had dropped significantly and is currently consolidating at around $40 per share. He pointed out that there is a massive support at around $30, the IPO price.
“As a long term strategy I looked at doing a call spread vs. a put spread. So my trade is pretty simple and easy. I am buying the January 2016, 50 – 60 Bull call spread. I buy the 50 calls and I sell the 60 calls. I can do this for about $2.60 debit, $260 per 1 lot. About $60, I procure profit. However that’s a little bit too much premium to outline for me. So what I did is, sold the January 2016 30 – 20 put spread. Why do I put these strikes? I know that there is support at $30. I don’t think it is going under $30. We looked at it on expiration in January 2016. I have a breakeven between $30 and $50. No harm no foul. Nothing to worry about. I get long under $30, which is support, which is the IPO price. And anything above $50 is profit,” Keene said about his options play.
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