Clorox's earnings are due anytime now ... and the options traders are betting they won't be good, according to one options analyst.
"It's earnings anxiety," Rebecca Darst said Thursday morning on "Squawk Box." When implied volatility is at twice the historic reading, what that tells you is that option traders feel that there's twice as much price risk over the next month than they've shown historically, and even though the earnings announcement is imminent, what we saw were options traders foregoing front-month exposure, and trading in June and July 55 calls, selling these for a premium, which, all other things being equal, was not an encouraging sign."
Calls are the right to buy a certain stock at a specific price in the future. The fact that traders are selling those rights means traders think the Clorox price will likely fall below that $55 level, allowing them to fulfill the call obligation at a lower cost and thereby make a profit.
There are signs of weakness in the consumer sector in general, Darst pointed out.