Fossil Stock Hits 4-Year High, Draws Options Traders

Fossil Group Inc (NASDAQ:FOSL) stock is surging 26.8% to trade at $9.98 this morning, earlier hitting a four-year high of $10.55 after the watchmaker scored its first quarterly profit in years. The company reported better-than-expected third-quarter earnings and revenue and lifted its full-year outlook, with CEO Franco Fogliato noting that turnaround efforts are running ahead of schedule.

Gapping above recent resistance at the $8 level, FOSL is now up roughly 167% year to date. The stock is also on track for its seventh post-earnings gain in the last eight quarters.

Part of today's rally could be attributed to short covering, as short interest represents 10% of the stock's available float. It would take short sellers more than six days to buy back their bearish bets, at FOSL's average daily trading volume.

Options traders are buying into the rally, with 2,872 contracts exchanged so far, or roughly 14 times the average intraday volume. Bullish positioning accounts for 75% of option delta volume, resulting in a positive net imbalance equivalent to 24,69316,831 shares. The November 8 put is the most popular.