Darden closed yesterday at $47.08, down 2.1 percent on the day. The stock has traded in a tight range all month and is just pennies above its 200-day and 100-day moving averages.
The shares were trading at all-time highs approaching $54 in July until the broader market began to sell off later that month and into August. Darden then gapped lower in September when its restaurant revenues suffered as a result of Hurrican Irene. Since then Darden, whose chains include Red Lobster and Olive Garden, has tested resistance at the $49 level several times.
Yesterday's put buying was not tied to any stock trades that we identified, though it could have been a hedge on an existing long position. It could also have been a straightforward bearish bet that the shares would fall roughly 10 percent by expiration on Dec. 16, a day before Darden's next earnings release.
Overall puts at all strikes in the name outnumbered calls by more than 3 to 1, a reflection of yesterday's bearish sentiment.
—Yamamoto has no positions in DRI.
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