Option Bulls Lunge at Soaring Life Time Fitness, Inc. (LTM)

Life Time Fitness, Inc. (LTM) short sellers may hit the bricks as the shares rally on reported talks to go private

Mar 6, 2015 at 11:18 AM
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Sports center operator Life Time Fitness, Inc. (NYSE:LTM) has skyrocketed 16.7% to $67.30 -- and touched an all-time high of $69.13 -- thanks to reports the company is in talks to be taken private, and the stock's options are flying off the shelves amid the speculation. Most notably, LTM calls are trading at 20 times the average intraday rate, with bulls both taking profits and initiating optimistic positions.

Daily Chart of LTM since September 2014

Most active is the March 65 call, which is now handily in the money. A healthy mix of buyer- and seller-driven action has transpired at the front-month option. Those buying to open the call expect LTM to extend its journey north of $65 through the close on Friday, March 20, when the options expire. Meanwhile, those selling the calls to close are cashing in their chips, striking while the iron is hot.

In light of LTM's bull gap, delta on the call has increased nearly eightfold, to 0.71 from 0.09 at yesterday's close. In other words, the calls now have a 71% shot of expiring in the money in two weeks.

Elsewhere, short sellers are likely nervous. Short interest on Life Time Fitness, Inc. (NYSE:LTM) accounts for 13.9% of the stock's total available float, representing more than 18 sessions' worth of pent-up buying demand, at LTM's average pace of trading.

 

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