Watching Fossil

The overnight session has quickly faded into memory. This has developed into one of the more boring sessions recently. I'd take the saying "Don't short a boring market" to heart right now. There is nothing making me scurry to buy, but I'd rather let this bounce play out and short a breakdown rather than the bounce.

Fossil (FOSL) Source: StockCharts.com View Chart » View in New Window »

Watchmaker Fossil (FOSL) could provide fireworks after earnings tomorrow. The estimates are tough given FOSL's international presence, and once we add on the 7% short interest this could get interesting tomorrow. Options are pricing in a big move, although FOSL needs to crack $120 on the downside or $137.50 on the upside. The downside is more troubling under $120 as the stock could find $102.50 after a short pause around $115. The upside target is just below $150 if FOSL gets past $138. I don't think we'll see either tomorrow, but by May expiration, I expect the outer targets to be hit if the immediate containment areas of $120 or $138 are breached. I expect the upside to have tougher sledding, so if I were bullish, I would look to play a 2x3x1 May $125-$135-$140 call combination. As a bear, I would look towards a May $120-$105 put spread....146 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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