Fitbit Inc (FIT) Blaze Debut Sparks Bear Run

Fitbit Inc (NYSE:FIT) option traders aren't impressed with FIT's new Blaze watch

by Andrea Kramer

Published on Jan 5, 2016 at 12:34 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Fitbit Inc (NYSE:FIT) are down 12.1% at $26.15 -- just off a new record low of $25.52 -- as traders react to the company's new Blaze watch. As such, FIT has landed on the short-sale restricted list, and skeptics are swarming the options pits to bet on more downside.

FIT options are trading at three times the average intraday pace, and the stock's 30-day at-the-money implied volatility has jumped nearly 9% to 88.1% -- an annual high. While FIT calls were dominant early in the session, the stock's January 2016 27- and 32-strike puts are most popular now. Traders buying the puts to open expect FIT to extend its journey south of the strikes through the close on Friday, Jan. 15, when front-month options expire.

Leading up to today, though, FIT calls were being bought over puts at a ratio of more than 2-to-1. Specifically, on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio sits at 2.17. However, considering short interest rose by nearly 39% during the past two reporting periods, it's possible some of those calls were purchased by shorts looking for a hedge.

As alluded to earlier, Fitbit Inc (NYSE:FIT) today unveiled its "stylish" fitness watch, Blaze, ahead of the Consumer Electronics Show (CES). The watch is an attempt to compete with Apple Inc.'s (NASDAQ:AAPL) Apple Watch, and will be available for presale today and tomorrow for $199.95, FIT said.

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