Put Options on DRI on 7/9/2014

Darden Restaurants, Inc. (DRI) owns and operates full service restaurants in the United States and Canada.

It operates restaurants under the Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, and Wildfish Seafood Grille brand names.

As of December 19, 2013, it owned and operated approximately 2,100 restaurants. 

Shares have formed a bearish "flag" after the firm guided lower due to anemic sales at its Olive Garden restaurants. The firm recently sold its Red Lobster chain for $2.1 billion. The company plans to use the proceeds to buy its stock back. We expect lower share prices for this stock.

However, despite the sale of one of the companies' major restaurant chains, activist investors still want Darden to do more. With an ailing Olive Garden now accounting for 58% of the company's revenue, the company will have to boost Olive Garden's results if it is to fend off calls for more drastic measures from activists. 

52-Week Trading Range: $44.78 - $54.89

Last Trade: $45.59 

Trade Buy 1 August $46.00 Put at $1.45 For a net debit of $1.45 Profit/Loss Analysis Breakeven at $44.55 Maximum profit is unbounded Maximum loss is ($145.00) at strike of $46.00 Closing Summary Sold 1 August $46.00 Put at $0.45

Position closed on 8/16/2014 at price of $0.45 with a -68.97% loss in 38 days.

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