Gap has been sitting out of the retail rally this year, but one trader is betting on a comeback for the stock.
Shares of the clothing company jumped more than 20 percent at the start of the month after it announced it will split off its Old Navy business from the rest of the company brands.
The stock has since given back the announcement gains, but according to Dan Nathan of RiskReversal.com the options market is betting on a rebound.
On Wednesday, Gap saw two times its average daily call volume. Nathan highlighted the purchase of 6,000 June 27-calls for $1.27 per options contract. That's a bullish bet that shares of Gap will reach $28.27 by June expiration.
"We have this kind of little up move as the stock is trading back near the 52-week lows," Nathan said on CNBC's "Fast Money." "So obviously a trader looking to play for kind of a move back up to those prior highs."
Shares of Gap are up just over 1 percent this year, underperforming the broader retail group's gains of 10 percent. Nathan warns that a longer-term look at Gap's chart reveals "a huge air pocket down to the high teens if [Gap breaks] at current levels here."
Shares of Gap were trading higher on Thursday afternoon, around $26.06.