How the bulls are flying with Gogo
Gogo is attracting bullish option activity ahead of its earnings report tomorrow.
optionMONSTER's Heat Seeker system shows that about 3,600 May 20 calls were bought for $0.47 to $0.55 yesterday. Volume was well above the strike's previous open interest of 1,263, indicating that new money was put to work.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall. Yesterday's calls will gain in value if shares rise by mid-May but will expire worthless if the stock remains below $20. (See our Education section)
GOGO rose 3.37 percent to $16.58 yesterday. The in-flight wireless service provider bounced near the $13 level in mid-January but has been trapped at current levels below its 200-day moving average for the last 2-1/2 weeks.
The company announces fourth-quarter results before the market opens tomorrow. In addition, management is scheduled to present at the Piper Jaffray Technology, Media & Telecom Conference on March 11.
Total option volume in the name topped 6,800 contracts yesterday, 6 times its daily average for the last month. Only 463 puts changed hands, a reflection of the session's bullish sentiment.
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