Bears Want to Bury ConAgra

ConAgra Foods products
Daniel Acker | Bloomberg | Getty Images
ConAgra Foods products

ConAgra Foods has been dead in the water for the last month, and yesterday the bears stepped in.

OptionMonster's tracking programs detected heavy buying in the May 35 puts, with large blocks initially pricing for $0.15. Volume continued to build, ending the session at almost 11,300 contracts—more than 18 times previous open interest at the strike.

Puts lock in the price where shares can be sold in the food company, which gives them a strong inverse correlation. They can also generate significant leverage from even a small drop in the share price.

That price action was evident yesterday because ConAgra continued to tick lower into the close, and those puts quickly doubled to $0.30. The stock closed at $35.05, a decline of 1.35 percent.

ConAgra spent most of April trapped below $36 and now appears to be forming a bearish "head and shoulders" pattern around that level. It had benefited from a strong sentiment toward consumer staples earlier in the year, but its last earnings report missed estimates and the stock is now at levels unseen since 1997.

Total option volume was six times greater than average in the session, with puts outnumbering calls by a bearish 14-to-1 ratio.

—By CNBC Contributor David Russell

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David Russell is a reporter and writer for OptionMonster. Russell has no positions in CAG.