Whole Foods may not be the cheapest place to buy groceries, but some traders are betting that its stock is a bargain.
After rallying 54 percent from its October lows, shares of the organic food seller began selling off in recent weeks and are down 5 percent this month. However, on Wednesday, traders began making bets that the stock will break its 52-week high in the coming month.
Wednesday's call volume was three times its average. A lot of activity was centered on the April 17-expiry 55 strike calls, where some 5,000 contracts traded for roughly $1 each. That means about $500,000 was wagered that Whole Foods would trade above $56 per share, or 4 percent higher than Wednesday's close.
"We also saw some activity in the 57.5 calls," noted CNBC contributor Mike Khouw. "What's interesting to me is that Whole Foods isn't exactly loved by the Street and there aren't a lot of obvious catalysts between now and expiration."
Read More Kale to Greek yogurt: This is fast food...really
Whole Foods wasn't the only specialty food retailer to get hit this month. Rival Sprouts Farmer's Market is also down by 5 percent in March. Analysts see little reason for the recent decline in sector.
"The whole space has kind of cooled off a little bit," said Jerry Gray, who covers Whole Foods for Cowen & Co. "Grocers have been strong all year but may be taking pause. There is no fundamental drive for weakness. Traffic numbers have been pretty good. Inflation numbers are coming down, which could help on product costs which were a little bit of headwind in the past year."
That makes Wednesday's options buy fascinating to Khouw.
"When you see this kind of unusual activity—and it is all one direction without anything obvious—sometimes that is more interesting than when the catalyst is an obvious one," Khouw said.
Whole Foods Released its earnings in February and is scheduled to release its current quarter's report in May. The company has shown at least 9 percent year-over-year growth for each of the last five quarters.
