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Fitbit Call Options Fly Across the Tape Ahead of Expiration

Elizabeth Harrow

Fitbit Inc (NYSE:FIT) call options are flying across the tape today, with roughly 19,000 contracts exchanged so far -- already almost doubling the stock's average full-day volume of 9,991 contracts, per Trade-Alert. Front-month options expiration is just hours away, and traders are keying in on FIT's soon-to-expire September 4 call, where 6,921 contracts have crossed the tape.

FIT is trading above $4 per share this afternoon for the first time since July 31, just ahead of a brutal post-earnings bear gap. The stock is up 9.4% at $4.02, bolstered by a Reuters report suggesting the company is in talks with Qatalyst Partners regarding a possible sale of the company -- with Google said to be among the rumored potential bidders.

As a result, today's rush of Fitbit call volume is being matched with with surging share volume, as well; the 3.29 million shares traded has FIT on pace for its biggest volume day since at least that Aug. 1 earnings-related plunge. Now, FIT is on track to close above its 80-day moving average for the first time since early April.

A healthy 10.8% of FIT's float is dedicated to short interest, and some of the weaker bearish hands are likely hitting the exits today. If buyout speculation on Fitbit takes root, a full-fledged short-squeeze rally would take 4.9 days to fully play out, at the stock's average daily volume -- although the volume in today's session has been anything but.