Dole Food Co. has been falling all month, but traders are betting on a comeback ahead of the company's earnings report.
More than 6, 000 November 12.50 calls were bought yesterday, including a print of 4, 550 that went for $0.60 as shares climbed, according to OptionMonster's real-time tracking systems. The volume dwarfed open interest of just 350 contracts in the strike at the beginning of the day, clearly indicating new positions.
Dole shares rose 0.25 percent yesterday to $12.21, its first positive close this month. Shares of the fruit and vegetable distributor spiked above $14 on Sept. 12 with news that it was in talks to sell two business units , a deal that was announced a few days later. But the stock meandered sideways after that, falling sharply in October along with bearish option activity.
Yesterday's call buyers are looking for the stock to gain more than 7 percent by expiration on Nov. 16, the day many analysts are expecting the company to report third-quarter earnings. The premiums on those options could rise in the event of a rally before then, allowing traders to sell the calls at a profit earlier. If the stock is below the $12.50 strike price at expiration, however, those contracts will expire worthless.
The trades pushed total option volume in Dole to more than double its daily average. Overall calls outnumbered puts by 8 to 1, reflecting the session's bullish bias.
—By CNBC Contributor Mike Yamamoto
Additional News: Dole Food Sells Two Businesses to Itochu for $1.7 Billion
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Mike Yamamoto is an analyst and writer for OptionMonster. Yamamoto has no positions in DOLE.