Options traders are urging investors to mind the Gap.
Shares of the troubled retailer have fallen dramatically in the past year, down more than 27 percent while XRT, the ETF that tracks retail stocks, is up 3 percent in the same period. And now, one trader is betting the stock could fall even further in the next month.
On Monday, when options put volume ran 10 times its daily average, one trader made a big bet that the stock will fall 5 percent in the next four weeks. Specifically, the trader purchased 18,000 of the October 32-strike puts for $1.10 each. Since each put contract accounts for 100 shares, this is a nearly $2 million bet that shares of Gap will fall below $30.90 by October expiration ($110 x 18,000). That puts the stock just a hair above its 52-week low of $30.75 hit Aug. 24.