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Will Ross stock go on discount rack?

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are positioning for a potential drop in Ross Stores before the company releases key numbers in the next few weeks.

More than 3,000 November 57.50 puts traded in a strong buying pattern yesterday, with the largest prints going for $0.85, according to optionMONSTER's Depth Charge system. The volume was far above the open interest of 949 contracts in the strike at the start of the session, indicating new activity.

Our systems did not detect any stock trades tied to these options yesterday, but they could have been bought to hedge a previously established long position . If not, these long puts are making a straightforward bet that the stock will drop before they expire in less than a month. (See our Education section)

ROST fell 2.52 percent yesterday to close at $60.32 as it continues to hold support around the $62 level, just above its 200-day moving average. Shares of the discount retailer have pulled back after hitting all-time highs around $70 in August.

Total option volume in the name was nearly quadruple its daily average, with puts outnumber calls by more than 2 to 1. The company is scheduled to issue its next same-store sales report on Nov. 1 and third-quarter earnings results on Nov. 15.

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