GitLab Options Volume Doubles as Traders Position for 14% Post-Earnings Swing

Options trading in GitLab Inc. (GTLB) surged to nearly double its typical volume ahead of its September 1 earnings release, signaling that traders are positioning for a significant post-announcement stock move. Market pricing implies a potential price swing of 14% or more in either direction, according to an analysis by Investing.com.

Unusual Options Activity

Total options volume climbed to 13,874 contracts on Wednesday, with bullish call options outnumbering bearish put options by a two-to-one margin. This spike in activity, which dwarfs existing open interest in many contracts, suggests a wave of fresh speculative bets rather than the closing or rolling of existing positions.

Several large, structured trades dominated the activity, indicating a mix of strategies:

• A high volume of call spreads targeting a move above $50, a strategy that profits from a moderate rally.
• More aggressive call spreads betting on a rise toward the $60 to $75 range.
• A significant diagonal put spread, suggesting some traders are hedging against a potential decline or making a longer-term bearish bet.

What the Market Implies

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The elevated trading indicates the options market is bracing for a substantial reaction to the earnings report. While 3-month implied volatility remains high at 67.97%, it has cooled slightly as the earnings event approaches, suggesting the expected move is being priced in.

A decline in the options "skew"—a measure of the relative cost of puts versus calls—suggests that while call volume is higher, the market sees a more balanced risk between a sharp upside surprise and a significant decline. The last two major earnings beats for GitLab saw stock moves that exceeded what options markets had priced in.

Context and Key Levels

The heightened interest in GitLab comes amid a strong rally for the stock, which has gained 70% in the last six months. This momentum is supported by analyst expectations that the software development platform is on a path to profitability this year, driven by strong customer growth and accelerating adoption of its AI-powered features.

Following the earnings release, traders will be closely watching key price levels. The $50 and $55 call strikes represent potential resistance targets, while the $35, $39, and $45 put strikes are key areas of interest on the downside.