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Today, we're opening a new bearish trade on Signet Jewelers Limited ( SIG ). The risk overhang from Signet's ongoing legal troubles (employees stealing customer's jewels) and control problems could turn out to be more severe than many investors have assumed.
We think litigation uncertainty and low expectations for spending in the third-quarter will send the stock lower while it is at resistance. Through the end of the year, high-end retail should continue to struggle, and a break of September's lows would send SIG into another May-style decline.
Buy to open the SIG November 75 Puts (SIG161118P00075000).
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