Sponsored By:

Darden Restaurants (DRI)

January 20, 2009

Dear Fellow Options Traders,

Darden Restaurants Inc. (DRI) operates 1,702 restaurants in the United States and Canada including Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. After hitting a low of about $14 last November, the stock bounced to the high $20s and is now trading at about $23.75 per share.

Option investors are betting the stock will have indigestion soon and drop well below the $20 price level. We are seeing very unusual volume of Feb 20 and 22.50 puts being bought (more than 7,000 contracts collectively) and it appears these same option investors may be selling the Feb 25 calls, another bearish tactic.

Earnings are scheduled for March 16, but the company will give an update to analysts later this week.

Given the unusual nature of the DRI option trades today, we recommend going along for the ride: Buy the DRI Feb 22.50 Puts (DRINX) for $1.50 or less.

Have a great day trading.


Nick Atkeson and Andrew Houghton
Editors
Options Trader