Options Traders React as Fitbit Stock Swings Lower

Shares of Fitbit Inc (NYSE:FIT) were up nearly 2% at their intraday peak -- possibly getting a lift on negative reports for the new Apple Watch -- but were last seen down 0.3% at $6.23. And while some options traders are betting on a quick rebound for FIT stock, others are eyeing even bigger losses in the near term.

Amid below average volume, 5,710 calls and 2,569 puts have changed hands on FIT so far. On the call side, it looks one or more traders may be selling to close their weekly 9/22 6 strikes and rolling the bullish bets up and out to the October 6.50 strikes. If this is the case, they expect FIT to break out above $6.50 by the close on Friday, Oct. 20, when the front-month options expire.

Put traders, meanwhile, are targeting a quick reversal by the month's end. Specifically, it looks as if new positions are being purchased at the weekly 9/29 6-strike put, meaning speculators are bracing for a move below $6 by expiration at the close on Friday, Sept. 29.

More broadly, options traders have bought to open puts relative to calls at a faster-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.54 ranks in the elevated 75th annual percentile.

This skepticism is seen outside of the options arena, too. Although short interest fell 10.3% in the two most recent reporting periods, there are still 38.42 million FIT shares sold short -- 16.4% of the stock's available float. Plus, all but two of the 14 analysts covering Fitbit stock maintain a "hold" or worse recommendation.

This isn't too surprising, though, given FIT stock's long-term technical woes. Year-over-year, the shares have surrendered 61.7%. And while the stock has bounced back since skimming $5 in late August -- and is now trading back above its 200-day moving average -- the $6.80-$7.00 region has served as a stiff ceiling since a late-January bear gap.