By David Russell
Round Robin Gourmet Burgers (RRGB) reports earnings after the bell Thursday, and the bears are already smelling raw meat.
optionMONSTER's Depth Charge tracking system detected the purchase of 2,680 November 20 puts for $0.85 to $1.20 against open interest of just 140 contracts. The trades pushed total option volume in the restaurant chain to 6 times greater than average.
RRGB fell 1.47 percent to $20.05 in morning trading. The stock is down 10 percent in the last week and has been struggling since the spring amid weak sales trends.
It has been trapped below $22.50 since May 21, when it gapped lower on a weak earnings forecast. Management lowered guidance again in August.
Short interest built to a substantial 15 percent of the float as of Oct. 15, so the stock is clearly on the radar screen for the bears.
RRGB must fall at least 5 percent by expiration for the options bought today to turn a profit. Puts outnumber calls by 23 to 1 so far today, reflecting the bearish sentiment.
Disclosure: No position