Bed Bath & Beyond (BBBY) - Get Reportreported earnings after the stock market closed on Wednesday. Both revenue and profit exceeded analysts' expectations, and the retailer also announced its first quarterly dividend. The stock rallied early Thursday and was recently trading at $51.50, up $2.69, or 5.5%. The stock's gains appear to have been exaggerated, however, and a correction is likely to follow. Savvy traders can use stock options to profit from such a correction.

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On the chart, the price action Wednesday and so far on Thursday have formed a bearish inverted hammer chart pattern. This foreshadows a correction.

Confirming that bearish candlestick formation was a Bollinger squeeze in the range between the middle and lower bands. A squeeze occurs when the daily price range narrows, something that usually happens right before volatility expands. It is also noteworthy that since mid-February, most trading occurred in the range between the middle and upper bands, but in the last two weeks, it has moved down to the lower range. This is a bearish confirmation.

With these technical signals in mind, take a look at buying the April put options. With eight days to expiration, the $51.50 put recently had an ask price of 1.55, or a total cost of about $164 once trading fees are added. It will not take very much of a correction for this trade to turn profitable in the next few sessions.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging atTheStreet.com,Michael Thomsett alsoblogs at theSeeking Alphaand several other sites.He is author of 12 options books includingMaking Money with Option Strategies(Career Press, 2016) and has been trading options for 35 years. Check out Thomsett's free Covered Call Webinar on Saturday, April 9.