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Options Bulls Charge Toward Fitbit Stock

Fernanda Horner

The shares of Fitbit Inc (NYSE: FIT) are up 3.1% to trade at $6.36 this afternoon, on pace to close north of their 20-day moving average for the first time this month. Though the equity faced some challenges in March, when shares dropped to the $5.80 level, the stock's overall situation has dramatically improved from its 2019, all-time low of $2.83 in August. Regardless of the equity's struggle to overcome overhead pressure at the $7 mark since April, FIT is up 39.5% year-over-year.

Today's pop has options bulls coming in droves. So far, 20,000 calls have crossed the tape -- five times the average intraday volume, and over three times the number of puts traded. Most popular are the weekly July 7 call and the 6 put from the same series, with positions being opened at the former. This suggests traders are speculating more upside for FIT by the time these contracts expire. 

This penchant for bullish bets is the norm, considering 9,177 calls were traded in the last 10 days, compared to just 3,312 puts. Short-term options traders, on the other hand, are more put-biased. This is per FIT's Schaeffer's put/call open interest ratio (SOIR) of 1.24, which sits in the 75th percentile of its annual range. Among short sellers, short interest is building, up 11.5% in the past two reporting periods. The 62.19 million shares sold short now represent 27.8% of the stock's available float.

Analysts are still hesitant toward FIT, with all six covering the security carrying a tepid "hold" recommendation. However, the consensus 12-month price target of $7.35 sits at a 16.02% premium to current levels. This indicates the security is ripe for price-target cuts, which could provide some headwinds in the near future.

Regardless of the equity's next move, now looks like a good time to speculate on FIT with options. The stock's Schaeffer's Volatility Index (SVI) of 44% stands higher than just 23% of all other readings from the past year, implying that near-term options traders are pricing in relatively low volatility expectations at the moment.