Is Bearish Order Flow Signaling a Sell Off in Fossil Group, Inc. (FOSL) On Earnings?

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Fossil Group, Inc. (FOSL) is a Texas based consumer fashion accessory designer and manufacturer, with a physical retail presence consisting of over 300 brick and mortar standalone locations and over 200 outlet locations worldwide. At the time of this post (12:20PM CST), FOSL is currently trading at 99.19, up 0.77% on the day. The stock is currently well within the lower portion of its 52 week trading range of 91.84-121.89, and although it has managed to remain above key 95.00 level support on a daily chart, FOSL has been unable to maintain any significant upward traction and remains well below the downward sloping Ichimoku Cloud and most of the relevant moving averages.

Over the last eight quarters of earnings data available, FOSL has traded with mixed results, moving higher and lower equally (four out of eight sessions) immediately following the EPS release. The average historical move during this same time period was approximately 7.7%. FOSL has been drawing some bearish options activity today as traders buy put spreads expiring this week. Earlier this morning large blocks of the FOSL Feb 98-91 put spreads were bought indicating that this trader believe FOSL will close below $91 on Friday. The options market is implying a move of around $8.30 by Fridays close which would give us a downside target around $91.15. With the weakness in FOSL’s chart and the bearish order flow we are seeing in the stock today I will be looking to get short FOSL into the close.

Potential Trade: Buying the FOSL Feb 95-91 Put Spreads for $1.00
Risk: $100 per 1 lot
Reward: $300 per 1 lot
Breakeven: $94.00


Andrew Keene

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