On Thursday, J.C. Penney reported what some are calling "the worst quarter in the history of retail."
The company reported a quarterly loss of $2.51 per share, and revenue dropped by 24.8 percent. Revenue at stores open for at least a year fell 31.7 percent, and customer traffic dropped by 17 percent last quarter following a 10 percent decrease in the third quarter.
(Read More: JC Penney Posts a Huge Loss; Shares Tumble)
Not surprisingly, these dismal numbers spurred option traders to make some large bearish bets on the stock. The biggest was the purchase of 30,000 May 16-strike puts for $1.57, which was done with the stock at $17.50. This trade will be profitable if JCP is below $14.43, or 17.5 percent lower, by May expiration.
One of the biggest concerns investors should have in J.C. Penney's cash supply. In November, they told investors that they would end the year with $1 billion in cash, but actually ended up with only $930 million. On Wednesday, they told investors that they had delayed $85 million in payments to their suppliers until the early part of the first quarter. This is another red flag that could signal that the company is running out of cash.