Bear takes a bite out of Cracker Barrel


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Cracker Barrel Old Country Store has been drifting lower since hitting an all-time high three months ago, and now one bear is looking for a big drop.

CRBL Chart optionMONSTER's Depth Charge tracking system detected the purchase of 3,000 December 40 puts for $1.85 and the sale of a matching number of December 35 puts for $0.90. Volume was more than 11 times open interest in both strikes.

This bearish put spread cost a net debit of $0.95 and will earn a maximum profit of 426 percent if CBRL closes at or below $35 on expiration.

The restaurant and retail stock fell 0.35 percent to $47.80 yesterday and is down 9 percent since topping out at $53.43 on April 22. Profit and sales were better than expected on May 25 and management boosted full-year guidance, but the shares continued to drift lower.

CBRL appears to be developing resistance at its 50-day moving average (black line on chart) and has been trading below its 100-day moving average (red line) for the last two weeks, technical factors that some traders may consider evidence of a bearish trend.

Overall options volume in the name was 22 times greater than average in yesterday's session, with puts accounting for a bearish 98 percent of the activity.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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