Bears Scramble to Cover Their Bets on RadioShack Corporation

It seems as though investors across Wall Street are growing steadily more upbeat toward RadioShack Corporation (RSH). On Tuesday, for example, traders on the International Securities Exchange (ISE) bought to open 2,062 calls on the electronics retailer. By contrast, only 42 puts were purchased on the ISE, revealing a distinct bias for bullish bets over their bearish counterparts.

In fact, RSH's 10-day ISE call/put volume ratio now stands at 7.44, as speculators have snapped up more than seven calls for every put during the past two weeks. This ratio ranks higher than 92.1% of other such readings taken within the previous year, suggesting that traders have rarely purchased calls over puts at a faster clip.

However, there could be an ulterior motive behind this call buying. Short interest on the stock has been steadily falling in recent weeks as RSH races up the charts, with the number of shares sold short tumbling by 34.2% during the past month. With more than 8% of the equity's float still dedicated to short interest, the remaining bears could be scrambling to buy calls in order to hedge against an extended rally.

On the charts, the shares are currently knocking on the $20 level. The stock caught a major boost earlier this month after RSH announced plans to begin carrying Apple's (AAPL) iPhone, which many analysts have cited as a positive catalyst for the retailer.

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