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Bebe (BEBE) has slid some 25% to $6.10 over the past month, but one strategist thinks there will better times ahead for the women's-clothing retailer. This morning, someone bought a whopping 30,000 of the March $10 calls, the first 1,000 lot feeler only cost $0.10 while the other 29,000 contracts had to pony up $0.20 per contract. According to TradeAlert, this is the largest block of options to trade in the name in over 18 months and represents over five times the entire existing open of options in the name.

The company is set to report earnings on Thursday, but clearly this trader has a longer-term outlook. There was a small spike in stock volume at about the time this trade went off, which could have been simply market makers hedging. Or it could be the purchase of the calls was tied to the sale or shorting of stock to create a long gamma position.

This might make more sense since the 52-week high of Bebe is $9.50 and the stock hasn't been above $10 since August of 2008. Given the tough retail environment -- especially for small specialty shops that have difficulty matching the price slashes of big box competitors -- shorting stock against the long calls would be a way to play that Bebe survives the holiday season and shows signs of recovery heading into the spring, or becomes another casualty of the recession.

The company has already announced that same-store sales for the quarter ending October 3 had tumbled by 25% with anemic top-line revenue of $120 million. The company does have about $2.50 a share in cash and virtually no debt, so bankruptcy doesn’t seem to be an issue. But another quarter of lackluster sales could pressure the shares. On the other hand, if it survives, it might enjoy the holidays; it could use the weakened retail landscape to secure new leases at favorable rents and possible even use its cash to expand.

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