Traders Bet on Major Rebound from Falling Fossil Group, Inc. (FOSL)

Fossil Group Inc (FOSL) still has the support of some traders, despite steep losses

May 6, 2015 at 10:55 AM
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Fossil Group Inc (NASDAQ:FOSL) is off 8.9% today at $78.80 -- and earlier touched a two-year low of $77.81 -- as the Street responds negatively to the company's first-quarter earnings report. Specifically, no fewer than three brokerage firms cut their price targets on the stock -- including Cowen, which also downgraded the shares to "market perform" from "outperform" -- while Sterne Agee upped its target to $83. Meanwhile, in the equity's options pits, contracts are crossing at 13 times the expected intraday rate.

One of the most popular options is the weekly 5/8 86-strike call, which appears to be seeing buy-to-open activity. These traders are betting on the shares to rebound sharply by week's end -- when the contracts expire -- and take back $86.

This call buying is more of the same from FOSL's options traders. Over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has amassed a call/put volume ratio of 1.95, which outranks 78% of readings from the past year. This means traders have bought to open calls over puts at a faster-than-usual rate.

As alluded to earlier, analysts are mostly bearish on the stock, which is currently on the short-sale restricted list. In fact, eight of 12 brokerage firms say it's a "hold" or worse. And it's not like Fossil Group Inc (NASDAQ:FOSL) has done much to sway their opinions. With today's losses, FOSL has dropped roughly 29% in 2015.


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