A trader is taking a downside option position in Darden Restaurants as its shares sit at some key technical levels.
OptionMonster's real-time tracking systems detected the purchase of 2,466 December 43 puts at the same second for 55 cents. The previous open interest at that strike was just 491 contracts, so the puts were bought to open a new position.
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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