On Sept. 14, the S&P 500 reached its 2012 peak and is down 3 percent since then.
One stock that has not been dragged down with the broad market is Whirlpool . In fact, the home appliance giant is up 20 percent since Sept. 14 and 111 percent year-to-date.
On Thursday, we saw heavy call buying in the stock, suggesting that option traders believe Whirlpool's rally is not over yet. In total, 1491 December 100-strike calls were bought Thursday for $4.50 each. These buyers are betting that WHR will be above $104.50, or 4 percent higher, at December expiration, which is 49 days away.
So why the bullishness?
Whirlpool's stock has been on a tear lately, due to better-than-expected earnings. The company reported third quarter earnings on Oct. 23 that blew away market expectations, and the company also raised guidance for full year earnings.
(Read More: What's the Winning Formula This Earnings Season?)
And investors have been attracted to the stock based on its valuation: It has reasonable debt levels, a P/E below the S&P 500's, offers a 2 percent dividend yield, and generates a 11.6 percent return on equity.
However, let's also present the other side here.
The stock may not have too much more upside before it becomes fully valued. If the stock trades up to $104.50 like this option trade predicts, its P/E ratio will be exactly in-line with the S&P 500's. Also, investors should note that while quarterly earnings have been beating market expectations, growth is slowing.
I like the relative strength this stock has shown in recent weeks, but would be cautious about buying the stock here.
Instead, call options make the most sense for gaining exposure to this name, because they keep risk limited while offering the opportunity to profit if the momentum behind this stock continues to drive it upward.
Brian Stutland is the President of Stutland Equities and a contributor to CNBC's "Options Action."
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