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Here’s why one scorched restaurant stock may be about to sizzle

Darden Restaurants has taken a tumble this year, but one trader is betting the stock is about to heat up.

Shares of the restaurant group, which includes popular chains like Olive Garden and The Capital Grille, have plunged nearly 12 percent since January. However, "Options Action" trader Mike Khouw says the Florida-based company could be gearing up for a resurgence.

Call volume for Darden on Thursday was 15 times average. Khouw said that's unusually bullish activity for stocks in the casual dining group.

"We saw it in a couple of restaurant spaces," Khouw said Thursday on CNBC's "Fast Money." "These are names [that] haven't been doing particularly well, and not all of the news has been great."

Despite the recent surge in gasoline prices, consumer spending has still managed to tick higher, but many restaurant stocks have been sitting out of the rally. Shares of Darden Restaurants are now down nearly 15 percent from their 52-week high of $99.31 in January.

Darden's slide comes as Chipotle and Shake Shack soar. Shares of Chipotle surging 49 percent this year, while Shake Shack has boasted gains of nearly 35 percent. Khouw said the tables could be about to turn for the beaten-down dining space. On Thursday, Khouw highlighted a trade of over 2,000 of the July 85 calls being bought for $3.50 per contract.

"So [this] buyer [is] obviously believing the stock could make it above $85 by the $3.50 they spent," Khouw said. This bullish bet implies shares of Darden Restaurants will hit $88.50 by July.

Shares of Darden are still up more than 35 percent since 2015, with an average FactSet analyst rating of overweight and a price target of $100.68.

Darden Restaurants is expected to report fourth-quarter earnings on June 26. Shares were trading lower Friday afternoon, above $85.

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  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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