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New product roll-outs from GoPro Inc (NASDAQ: GPRO ) suggest the iconic, but tarnished, brand is back and still means business! And for investors, if history rhymes at all, it's time for another bullish vertical in GPRO stock. Let me explain.
It's only been a week since this strategist wrote about GPRO stock. Given a discussed and in-play December-dated bull call spread, you might be asking, what on earth, now?
How about "look up!" as GoPro shares are poised to take flight again!
Following GoPro's unveiling of its new and impressive Karma drone, awesome camera refresh in the Hero5 and cloud-based platform to complete the package, I'm convinced Wall Street is flat-footed on GPRO stock and underestimating a powerful GoPro brand reemerging as a strong second act.
In introducing its new line-up to the market GoPro has opened up the hobbyist or niche drone and action camera markets to a more mainstream demographic and one which could very well play out as an interested and willing-to-pay consumer - myself included.
GoPro Stock Daily Chart
A week ago, I wrote the strong inclination was to give GPRO stock a second chance. Shares of GoPro had traded into a fairly deep pullback to test moving-average- and Fibonacci-based technical support within a developing uptrend.
Fast forward to today (on your GoPro Hero5) and our timing, it turned out, was about as good as it gets. More to the point, we're more bullish, given the reaction in shares and the products we believe are worthy of launching GoPro stock higher.
After spiking higher Monday following GoPro's announcement, profit-taking has set GPRO stock up as a pullback play as it tests prior resistance. So far the price action looks supportive for the solidified uptrend to continue and reason to offer a fresh, bullish spread to match our view.
GPRO Stock Bull Call Spread Strategy
Reviewing GoPro stock's options board, the out-of-the-money GPRO Dec $17/$20 bull call spread is attractive. Priced for 92 cents, the vertical offers a potential return of $2.08 if GPRO stock can rally above $20 at expiration.
The spread is similar to last week's vertical with a $3 design width and use of the December contract.
On the other hand, more is required of GPRO stock due to higher strike positioning of this spread.
Bottom line, last week's proposed spread, while working out nicely so far, was in front of GoPro's product rollout. Now, that assumed risk has been replaced with increased optimism toward GPRO's ability to reclaim additional higher ground.
Investment accounts under Christopher Tyler's management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT .
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