GoPro shares have cratered over the past year, losing 60 percent of the value. But even as the stock slides on Tuesday, one trader thinks the company is set to rally into the holiday season.
Not only did GoPro just release the Hero 5 series of cameras, but "they're also making a strong move into virtual reality, so I like this stock. I like where this is headed in the longer term," Todd Gordon of TradingAnalysis.com said on CNBC's "Trading Nation."
On the weekly chart, Gordon espies an "inverse head and shoulders" pattern. This is a bullish pattern that is supposed to support a rally should a stock break above a given "neckline" level.
"If we can get a continued push, we should be able to move up towards higher levels as we move into the holiday season."
Gordon thinks the stock, currently trading just above $14, will rise to $20 in the months ahead.
In order to play for such a move, Gordon is buying a call spread. Specifically, he purchased the December 15-strike calls and sold the 20-strike calls for a total of $1.40 per share, or $140 per options contract.
If GoPro shares are actually at or above $20 upon December expiration, the call spread will be worth $500 — meaning that Gordon will have nearly quadrupled his money.
