By Jud Pyle, CFA, chief investment strategist for the Options News Network

At the risk of sounding like a broken record: the retail sector had a good run throughout the last few months, but it's overheated and a pullback is imminent. Today, we got that pullback after same-store sales were announced. But one investor is bucking the trend and has become bullish on

Limited Brands

(LTD)

.

Looking at the July 12.5 puts, around 11:20 a.m. EDT, an investor sold 7,000 contracts at 95 cents per contract with the stock trading around $12.63, making these puts slightly out-of-the-money. These puts are home to current open interest of 246, implying that today's trades were sold to open and will translate as new open interest tomorrow. It's noteworthy that out of the approximate 39,000 options traded in LTD so far today, more than 11,300 of them are July 12.5 puts. Normal daily volume in LTD options is around 29,000.

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The bullish investor in question is calling a bottom in LTD shares, and needs LTD stock to close higher than $11.55 (the strike plus/minus the premium collected for the puts) come July expiration to retain any of this premium. LTD shares dropped 37 cents to $12.76 in afternoon trading. LTD stock has rallied more than 100% since reaching a 52-week low on March 6 when these shares sank to $6.26.

The investor made a bullish bet despite worse-than-expected same-store sales numbers released this morning. Retail store openings fell 7%, which missed average analysts' estimates by about 4.5%, compared to the 1.1% gain last year.

In addition, same-store sales at Columbus, Ohio-based LTD took a 7% nosedive in May, matching analysts' estimates. But a glimmer of hope exists in consumer confidence, which beat analysts' estimates and climbed to 68.7 in May.

The investor could be selling these puts on a bet that retail stocks will continue to rally as consumer confidence improves. The investor could also be thinking that LTD simply doesn't have farther to fall in the short term after today's plunge.

I've written several articles that encourage caution in retail stocks. Yesterday, an investor bought more than 8,200 Nov. 30 puts in

JCPenney

(JCP) - Get Report

.

On May 14, I wrote

about a put-buying activity in the

SPDR Retail ETFs

(XRT) - Get Report

, as one investor showed bearish sentiment ahead of several retail earnings reports.

On May 12, I also outlined specific strategies to use for retail stocks to protect against the sector's run-up over since March. But at least one investor seems to be confident in taking on more risk in the retail sector using this LTD put sell.

Jud Pyle is the chief investment strategist for Options News Network (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."