Call Buyers Flock to Fitbit Inc (FIT) Amid Wristband Reveal

Fitbit Inc (FIT) call options are being targeted once again

by Alex Eppstein

Published on Aug 29, 2016 at 3:01 PM

While Apple Inc. (NASDAQ:AAPL) is dominating the headlines, fellow tech stock Fitbit Inc (NYSE:FIT) has some news of its own. Specifically, the company introduced a pair of new fitness wristbands, the Charge 2 and Flex 2 Fit. The news is being well-received on Wall Street, between a bullish analyst note and some upbeat options betting.

For starters, Leerink affirmed its "market perform" rating and a $16 price target on FIT. Regarding the new wristbands, the brokerage firm wrote, "overall we like the stability of pricing in the refresh and the feature upgrades look good."

Meanwhile, the weekly 9/2 and 9/9 15-strike calls are Fitbit's most active options this afternoon. Data from the International Securities Exchange (ISE) confirms some buy-to-open activity, suggesting traders foresee the stock toppling the key $15 area by the respective expirations -- at the close this Friday and next.

Call buying has been popular in recent weeks, according to the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, during the past two weeks on those exchanges, traders have bought to open more than five calls for every put. Plus, the resultant call/put volume ratio of 5.34 outstrips nearly 80% of all readings from the past year.

Not all of these bets are necessarily bullish, though. Short interest has been building, with these bearish wagers increasing 17% during the two most recent reporting periods, and accounting for 38.3% of FIT's total float. As a result, it's possible short sellers have been purchasing calls to act as upside protection.

On the charts, Fitbit Inc (NYSE:FIT) hasn't necessarily warranted the enthusiasm it's received, either. Despite being up 1.6% this afternoon at $14.91, the stock has surrendered nearly 57% of its value on a year-over-year basis.

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