Fitbit stock was in oversold territory as of yesterday's close
Despite staring at a second straight month in the red, some bullish analyst attention has Fitbit Inc (NYSE:FIT) stock higher this morning. Stifel upgraded the wearable tech name to "hold" from "sell," while cutting its price-target by 50 cents to $5.50. The analyst in coverage noted fourth-quarter earnings estimates appear achievable, despite concerns about durability of the fitness tracker device. As of now, the company is scheduled to report earnings on Tuesday, Feb. 20.
The news has Fitbit stock up 1.8% to trade at $5.30 this morning. It appears this burst may have been in the cards regardless, since as of yesterday's close,FIT boasted a 14-Day Relative Strength Index (RSI) of 29, firmly in oversold territory. Despite today's rally, the shares are still down 15% during the last three months and have been staring up at their declining 30-day moving average since the mid-December bear gap.
Short sellers continue to pile on. Short interest increased by 20% during the last reporting period to 37.60 million shares. This represents 16% of FIT's total available float, and nearly six days of pent-up buying power.
In the options pits, traders are still targeting calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FIT stock's 10-day call/put volume ratio of 3.60 indicates long calls have more than tripled puts in the past two weeks. Given the security's struggles and the bevy of short-sellers, its likely that some of this call activity-- particularly at out-of-the-money strikes -- is a result of short sellers using options to hedge against upside risk.