Were Fitbit Inc (FIT) Bears Ready For Today's Pop?

Fitbit Inc (NYSE:FIT) is moving higher on strong demand for its iTunes app

by Josh Selway

Published on Dec 28, 2015 at 10:31 AM

It's been a lousy few months for Fitbit Inc (NYSE:FIT), with shares of the wearable device maker down over 21% quarter-to-date. However, shareholders have something to cheer about today, as the company's activity tracking application surged to the top spot of Apple Inc.'s (NASDAQ:AAPL) free app offerings on iTunes, suggesting a strong holiday season for the firm. As a result, FIT has picked up 2.4% today to trade at $29.60. 

While the stock has struggled on the charts, most analysts have kept the faith. For instance, 14 of the 20 brokerage firms that track FIT say it's a "buy" or better, and zero call it a "sell." Moreover, the fitness stock's average 12-month price target stands at $48.29, which marks a roughly 63% premium to current levels. 

Option traders have also shown bullish tendencies. Over the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.66 calls have been bought to open for every put. Furthermore, FIT's Schaeffer's put/call open interest ratio (SOIR) of 0.91 means that call open interest outweighs put open interest among options that expire within three months. Today, in fact, call volume is running at twice the expected intraday rate. 

However, there may be some connection between this call bias and Fitbit Inc's (NYSE:FIT) elevated short-interest levels. Over 46% of the stock's float is sold short, representing approximately four days' worth of buying power, at normal daily volumes. As such, some of the recent affinity for calls could be due to short sellers looking to hedge against a short-term pop, like the one we're seeing today. 

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