Sysco shares have fallen more than 6 percent since Monday after the nation's largest food distributor said it would terminate its merger agreement with US Foods. The news prompted a slew of downgrades, with Deutsche Bank and Guggenheim Securities lowering their ratings on the stock to "hold." But despite the sharp selloff, it appears some traders are sensing a turnaround.
On Tuesday, when the shares were down nearly 4 percent and options call volume ran more than 20 times its daily average, one trader bet more than $2 million that the stock would soar in the next five months.
Specifically, the trader purchased 25,000 of the November 39-strike calls for 85 cents each. Since buying a call allows one the right to purchase a stock at a set price at a given time, this trade is profitable if shares of Sysco are above $39.85, or more than 10 percent higher by November expiration.