Callaway Golf Heads Into Earnings with Shorts Building but Borrow Costs Unmoved

CALY reports its next set of results on August 6 against a backdrop of rising short interest, a shifting options tone, and strong fundamental momentum — a setup with competing signals worth unpacking before the print.

The most notable development in positioning is a sharp jump in short interest over the past month. Bears have added roughly 22% more short exposure since early July, pushing shorts to 4.6% of the free float — a meaningful level for a leisure-products name. Yet the borrow market is telling a different story: availability remains extraordinarily loose at nearly 1,932% of outstanding short interest, meaning shares to lend vastly outnumber the demand for them. Borrowing costs are running at just under 0.5% annually, down roughly 6% on the week. That combination — rising shorts, abundant borrow, negligible cost — suggests the short buildup reflects a considered fundamental view rather than any squeeze pressure or forced positioning. The stock itself has recovered well, gaining 7% on the week and over 7% on the month to close at $19.57, which means shorts added into a rising tape.

Options sentiment has shifted more cautious but not dramatically so. The put/call ratio has climbed to 0.67 from a mid-July range closer to 0.45 — a clear step up in hedging demand — though the move is only about 0.77 standard deviations above the 20-day average. That leaves the z-score well short of the defensive extremes (the 52-week high on the PCR is 1.40), suggesting investors are nudging toward protection rather than aggressively bracing for a miss. The shift in the PCR coincides almost exactly with the mid-July date when short interest also began accelerating, implying the two signals are driven by the same cautious re-assessment of the stock.

The fundamental backdrop cuts against the bearish lean. Callaway's 90-day EPS momentum ranks in the 98th percentile of the ORTEX universe — near the very top — and the EPS surprise factor sits in the 75th percentile, meaning the company has a consistent recent history of beating estimates. A recent company note flagged strong Q2 earnings and raised full-year guidance as the catalyst for earlier price strength, and those beats appear to be feeding the forward-estimate upgrade cycle. Institutional ownership is broadly stable, with BlackRock holding 11.3% and Dimensional adding shares. One notable cross-current: Erik Anderson, a 10% owner and board member, sold 50,000 shares in two tranches at around $15.75–$16.29 back in May — below current levels — though the significance of that has arguably been overtaken by the subsequent price appreciation. Leisure-products peers MCFT and GOLF are down roughly 3% and 1.6% on the week respectively, making CALY's outperformance stand out within the group.

Tomorrow's print tests whether the fundamental momentum — the earnings beat streak and raised guidance — can continue to justify a stock that has re-rated higher even as short sellers quietly build their positions against it.