By Chris McKhann, an analyst at OptionMonster.

AutoNation ( AN) has fallen 13% today, and one trader is using options to take a further bearish position.

Shares of the national car dealer were above $14 yesterday but are at about $11.95 after UBS downgraded the company today from "neutral" to "sell." AutoNation has been in a steady uptrend since hitting a low of $3.97 last fall, but that $14 level has been a resistance since last June.

The options trade was all the way out in October, where 10,000 of the Oct. 15 calls were sold for $1.70 and 10,000 of the Oct. 10 puts were purchased for $1.80, according to OptionMonster's tracking systems. The net debit is just $0.10, which is the risk if the stock finishes between $10 and $15. Above $15, the position has unlimited risk, and below $10, it can make highly leveraged gains.

This is clearly a bet that AN cannot hold this level and will be at least another 20% lower from here over the next seven months.

The writer has no holdings in the securities mentioned.

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