Options traders have been bracing themselves for bad news from some of Wall Street's most reliable companies, said Rebecca Darst of Interactive Brokers.
Specifically, Darst noted heavy activity in puts on General Electric and Caterpillar , Dow components that also are part of the SPDR Industrial exchange-traded fund. Puts indicate trader expectations that share prices will fall.
Even though options volume this week has been significantly lower than last week, Darst said, the trading has been significant in that it has indicated "traders possibly positioning defensively for some disappointing earnings, or for a slowdown in demand. I think people are coming on board with this economic slowdown story."
Darst said traders were buying GE puts in the October contract at strikes of $28 and $30.
GE is the parent of CNBC and CNBC.com.