Fossil is back near record highs, and investors are nervous
about a drop.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 2,000 December 125 puts for $4.20. Equal-sized blocks
were sold at the same time in the December 115 puts for $1.20 and
the December 135 calls for $1.25. Volume was more than 5 times open
interest at all three strikes, indicating that new positions were
The investor probably owns shares in the watch maker and is using
the options to protect against a pullback. He or she will collect
$10 if FOSL drops to $10 and must also unload the stock if it
rallies past $135--roughly the same level where it peaked earlier
in the month. The trader paid $1.75 to implement the strategy,
which combines elements of a
. (See our
FOSL fell 0.97 percent to $126.08 yesterday but has doubled since
July 2012. It recently peaked near its all-time high around $139,
which could make some traders want to take profits. The last
quarterly report on Nov. 5 beat expectations, but guidance lagged
The bearish trade accounted for nine-tenths of yesterday's option
volume in the name, according to the Depth Charge.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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