Shoppers Buy Upside Whole Foods Options

By Chris McKhann , analyst at OptionMonster

Whole Foods (WFMI Quote) has dropped more than 13% in the last week, but that isn't stopping traders from stepping in to buy upside options.

The grocery chain, which had been up near $22 only a week ago, fell 2.5% to close Tuesday's regular session at $19.03 and dropped another 2.5% in after-hours trading. But the stock price is approaching technical support levels and is up 170% from its November low just above $7. While the stock has posted a lower high, it has yet to make a lower low meaning that it hasn't broken its uptrend yet.

Some option traders are clearly betting that the shares will continue to rise. OptionMonster's systems show that almost 14,000 of the July 22 calls were purchased, with larger institution-sized blocks going for 40 cents. This action was against open interest of 6,791, indicating that new positions were being opened....