Whole Foods Market reports earnings after the bell today, and one trader has positioned for a drop.
detected the purchase yesterday of November 31 puts for $1.60, and the sale of November 27 puts for $0.42 and November 37 calls for $0.40. The trade was executed on 7,836 contracts of each strike and cost a net $0.78. Volume was above open interest.
Whole Foods fell 0.68 percent in yesterday's session to close at $32.06. The organic grocer is up 69 percent since the start of July, driven higher by strong earnings and short covering. Management raised guidance the last time it issued results on Aug. 4.
The options trade will make money if Whole Foods closes below $30.22 on expiration and lose money over $37. The investor may expect the shares to fall after failing to break through the $34 area, which served as support and resistance in the first half of 2008.
The trade accounted for about half the activity in Whole Foods yesterday. Other investors were more bullish and bought 3,500 December 33 calls. Most of the large trades priced for $1.83 to $1.91.
Overall options volume in the name was four times greater than average.
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David Russell is a reporter and writer for .