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Parabolic Short in GPRO

Home › Forums › Swing Trades › Parabolic Short in GPRO

  • This topic has 3 replies, 1 voice, and was last updated 7 years, 9 months ago by Steven Place.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • September 29, 2014 at 10:27 am #2377
    Steven Place
    Keymaster

    There is no easy way to short this stock, but it will probably be a good short for the next few weeks. I’m not expecting an outright collapse, just some reversion.

    gpro

    Yes, it’s parabolic and it’s due to get knocked down. But putting on a ton of short gamma here is tough.

    Here is the trade I like:

    Buy to open GPRO Oct/Nov 75 put calendar @6.20 — HALF SIZE

    gpro-risk

    If GPRO runs above 92.50 I will ADD to the trade with more calendars on a different strike.

    I was looking at butterflies but the skew is really weird, and I think the November options will hold their premium well into a pullback as it has earnings up on deck.

    September 29, 2014 at 10:31 am #2380
    Steven Place
    Keymaster

    This trade price has declined from 6.20 down to 5.80, i think 6 bucks is a good fill.

    September 30, 2014 at 8:40 am #2379
    Steven Place
    Keymaster

    Because of the changes in the term structure of the options, the trade is profitable even though GPRO continues to rip higher.

    As the stock is trading at 95 I am going to ADD to the trade:

    Buy to open GPRO Oct/Nov 85 put calendar @8.10 or lower

    This is my last planned add, and I’ll just hold it for a week or two as we head into Oct opex.

    gpro

    October 10, 2014 at 10:10 am #2378
    Steven Place
    Keymaster

    The trade worked out fine, but it wasn’t an absolute stunner.

    gpro

    You can try to hedge using something like a strangle buy but the best bet is going to just close or use a mental stop to avoid any big volatility going into next month.

    The main issue as to why this didn’t work as well is because the back month options had a big decline in implied vols. The nov 75 put started at 125% and is currently sitting at 113%, so that’s where a good chunk of the potential gains went.

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