Option Bears Target Sliding Signet Jewelers Ltd. (SIG)

Signet Jewelers Ltd. (NYSE:SIG) is down 4% today at $88.55, after the company objected to allegations made Thursday in an investment newsletter, questioning both its credit portfolio and the quality of its gems. The stock has had a rough ride lately, hitting a two-year low of $84.80 yesterday. And today's slide -- which has kept SIG on the short-sale restricted list -- has traders flocking to the options pits.

Stepping back, SIG has given up 28% of its value so far in 2016. The shares were struggling with resistance at their 30-day moving average, until a poorly received earnings report sent them sharply lower last week.

Analysts haven't rushed to judgment, despite the stock's severe technical woes. In fact, since its post-earnings bear gap, SIG has received just one downgrade to "neutral" and three relatively mild price-target cuts -- with the lowest to $130, a 47% premium to current levels, and a mark the shares haven't seen since early January. Moreover, 92% of brokerage firms following the equity still rate it a "buy" or better, without a single "sell" on the books.

Elsewhere, traders have not been so kind. Short interest rose more than 18% during the two most recent reporting periods and now represents nearly 10% of SIG's available float, or 6.4 days' worth of trading, at the stock's average daily volume.

And in the options pits, long puts have easily outpaced long calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SIG has a 50-day put/call volume ratio of 1.31 -- higher than 71% of the past year's readings.

Today, that trend is only amplified. As alluded to, options are trading at unusually high volumes, with puts crossing at five times their average intraday rate. With put and total open interest already parked at annual highs, intraday put volume is on pace to finish in the 99th percentile of its annual range (after reaching a 12-month peak yesterday). At last check, roughly 15,000 puts are on the tape, compared to about 5,700 calls.

Digging down, new positions are being purchased at SIG's July 80 put. These put buyers are betting on the underlying stock falling below $80 -- and notching a new two-year low -- before the close on Friday, July 15, when the back-month option expires. But if shares of Signet Jewelers Ltd. (NYSE:SIG) fail to breach this level in time, the most these bears stand to lose is the initial premium paid.