Stitch Fix shares are on fire, and some traders are betting the rally will get even hotter.
Shares of the clothing subscription company soared more than 8 percent on Thursday, and are up more than 11 percent so far this week. The move was in part due to rumors that billionaire Oprah Winfrey was taking a stake in the company, which were quickly denied by a Winfrey representative.
According to Dan Nathan of RiskReversal.com, the options market is sizzling for the stock.
On Wednesday, Nathan highlighted a block of traders purchasing the July 30 calls for an average price per contract of $1.33. These are bullish bets that shares of Stitch Fix will rise above $31.33 or more than 8 percent higher from their current levels by next month.
Shares of the personal shopping service provider have surged more than 50 percent since hitting a low of $18.35 earlier this month. Moreover, Nathan pointed out that despite short interest in the stock up at 20 percent, it could be still be poised for a bigger breakout.
"A lot of these recent IPOs are doing very well right now," he said Wednesday on CNBC's "Fast Money, " "So it's kind of a tough trade to fade at the moment."
Stitch Fix shares are up 90 percent since going public in November and have now risen 11 percent year to date.