Fitbit Inc (FIT) Option Bulls Dismiss Dismal Earnings History

Fitbit Inc (NYSE:FIT) will unveil its quarterly earnings report after Monday's close

Feb 19, 2016 at 2:24 PM
facebook X logo linkedin


Fitbit Inc (NYSE:FIT) has only reported earnings two times as a publicly traded company, with the shares averaging a single-session post-earnings move of 11.1%. The options market is projecting a bigger 23% swing. Meanwhile, although each one of FIT's quarterly earnings reports was poorly received, option traders have been lining up on the bullish side of the fence in the weeks leading up to Monday night's results.

Specifically, speculative traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 2.34 calls for each put over the past 10 sessions. Echoing this is FIT's Schaeffer's put/call open interest ratio (SOIR) of 0.46, which indicates that call open interest more than doubles put open interest among options expiring in three months or less.

Diving deeper, the stock's weekly 2/26 15-strike call has seen the largest increase in open interest over the past two weeks, with 4,042 contracts added. If -- as has been the trend -- these in-the-money calls were bought to open, the goal is for FIT to extend its lead over the $15 mark through next Friday's close, when the weekly options expire.

With a hefty 15% of FIT's float sold short, it's possible that some of the recent buy-to-open call volume -- specifically, at out-of-the-money strikes -- is a result of shorts hedging their bearish bets. Whatever the reason, the equity's near-term options are pricing in extremely high volatility expectations at the moment. In fact, FIT's Schaeffer's Volatility Index (SVI) of 119% and its 30-day at-the-money implied volatility of 117.4% sit just 5 percentage points from a 52-week peak.

Elsewhere, the brokerage bunch has been slowly changing their optimistic tune on FIT, given its 47% year-to-date deficit to churn near $15.80. Just this morning, BofA-Merrill Lynch lowered its price target on the stock to $31 from $36 (although this is still more than double current trading levels).

However, with three-quarters of covering analysts maintaining a "buy" or better rating -- and the average 12-month price target perched at a lofty $33.84 -- there's plenty of room for more bearish brokerage notes, should shares of Fitbit Inc (NYSE:FIT) stage another post-earnings retreat.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI