Fitbit Options Traders See Post-Earnings Slide Ahead

Options traders are piling on the puts, as Fitbit (FIT) shares near all-time low territory ahead of earnings

Feb 22, 2017 at 12:01 PM
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Fitbit Inc (NYSE:FIT) is set to report earnings tonight, and it looks like options traders are betting on another slip into the red for the shares, which have finished in negative territory in seven of the last eight post-earnings sessions. Last November, FIT plummeted 33.6% after delivering earnings, with the stock continuing to sit out the post-election rally. This time around, options players are pricing in a 16.5% move in either direction, as the shares start to slip preemptively today.

FIT hit a new all-time low of $5.62 earlier this month, and is currently down more than 54% year-over-year. The shares are trading at $5.94, down 1.7% for the day, with Garmin Ltd.'s (NASDAQ:GRMN) earnings win and wearable tech hype potentially pressuring the shares lower. Any additional downward pressure from an earnings miss could easily push the shares into record-low territory.

Fitbit Options Traders Bet On Another Earnings Slip

In the options pits, puts are crossing at twice their average intraday volume, and leading calls roughly 7,000 to 5,000. Specifically, the weekly 2/24 5.50-strike put is today's most active option, with at least some buy-to-open action. These options buyers are betting on even lower lows for FIT by the time the puts expire at the end of the week.

In fact, even though today's put/call ratio of 1.39 is higher than 96% of all other readings from the past year, puts have been prominent in FIT's option pits as of late. FIT's Schaeffer's put/call open interest ratio (SOIR) of 1.02 sits in the 90th percentile of its annual range, indicating near-term options players have rarely been more put-skewed in the last 12 months. What's more, call open interest is in the bottom 6% of its annual range.

In addition to downbeat options players, short sellers have set their sights on FIT shares. FIT's short interest is up 17.7% over the last two reporting periods, with shorted shares now accounting for 37.2% of FIT's float. It would take traders the better part of a week to cover these bearish bets, at Fitbit Inc's (NYSE:FIT) average daily volume. 

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