Shares of Reddit Inc (NYSE:RDDT) are up 11.5% at $176.25 before the open, after news that the social media platform will join the S&P 500 Index (SPX) on Aug. 18, replacing AvalonBay Communities (AVB). This will make RDDT the second social media company in the index alongside Meta Platforms (META).
Should these gains hold, they will provide the equity with a much-needed bounce. Reddit shares have lost 22.2% over the past month and are down 31.2% year to date.
Part of today's gains could be attributed to short covering. The 19.21 million shares sold short account for 13.24% of Reddit's available float, representing nearly four days' worth of potential buying power.
Options traders have also been betting on more upside. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX), Reddit's 50-day call/put volume ratio of 2.23 ranks higher than 84% of readings from the past year, showing calls have been picked up at a much faster-than-usual pace during the past 10 weeks.
