Buying A Call Option On Fossil $FOSL
Buying A Call Option On Fossil $FOSL
The big marketing event of the month so far goes to who else but Apple $AAPL. The largest company in the world officially launched its highly anticipated Apple Watch at a widely covered conference.
$AAPL is making a huge bet on their latest gadget, which is expected to redefine the smart watch industry (the way the iPhone did to the smartphone market). The device is certainly cool, with tons of interesting features.
However, the Apple Watch isn’t cheap either. The prices range anywhere from $349 to over $10,000 per device. And that doesn’t even include the band…
So what’s that mean for a company like Fossil $FOSL?
Fossil is a popular fashion accessories chain for retail consumers. While the company offers a wide array of products, it’s principally known for its watches, sold both in department stores and company-owned retail stores.
Currently, $FOSL is trading at $81.39, down 27% on the year. That’s just 2% from the 52-week low of $79.85, and 33% from the 52-week high of $120.79.
So is now the time to buy a call option on $FOSL?
As a reminder, a call option makes money when the underlying stock goes up. Is $FOSL due for a rebound?
For a more in-depth look at Fossil, you can check here.
Here’s the deal…
Analysts and investors both seem to be concerned about the Apple Watch’s impact on Fossil and other watchmakers. The wrist watch market has already been in decline every since smartphones became the primary time teller for many people.
And now, Apple is launching what’s sure to be a super popular watch. If anyone can bring the watch back in style, it’s Apple.
But that’s the thing…
If watches come back in style, then ALL watches should benefit. A rising tide tends to life all boats. And, the Apple Watch isn’t exactly cheap. Plenty of consumers are going to want $100 watches instead of the much pricier smart watches.
Fossil shares have already taken a hit due to concerns over falling watch sales. However, the company still looks fundamentally sound and cheap from a valuation standpoint. As such, any increase in sales is likely to bring stock buyers back in a hurry.
Here’s the chart of $FOSL:
As you can see above, the stock plunged recently and has been in a major downturn. The price is well below the 50-day moving average. A major rebound could very well be in the cards.
Now could be a great time to buy a $FOSL call option
Fossil shares are certainly down big these days. However, the future looks brighter as Apple will do its best to make watches trendy again.
As such, buying a longer-term call is in order. The September 90 calls are trading around $4. That’s gives you six months for a rebound to occur and is still well below the major moving averages.
Yours in Profit,
Gordon Lewis
Note: Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com. You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.
Category: Call Or Put Options?
