Shares of Kellogg Company (K - 50.70) plummeted yesterday, after the cereal giant slashed its full-year guidance. However, the company still saw plenty of bullish options activity, as more than 4,800 calls crossed the tape, reflecting eight times the equity's average daily volume. More than 1,500 of these calls were exchanged at the out-of-the-money May 52.50 strike -- about half of them at the ask price, suggesting they were bought. Open interest at this strike rose by 997 contracts overnight, pointing to an influx of new positions. This option is now home to open interest of 1,220 contracts.

Looking closer at the data, it appears that a block of 135 calls was sold at the June 50 strike, while an equal number of calls were simultaneously purchased at the June 52.50 strike. Because both options showed an overnight climb in open interest, this activity implies the initiation of a bear call spread. Essentially, the trader is betting that K will finish at or below $50 by June expiration -- rendering both options worthless, and enabling him to pocket the maximum reward of $1.35 per pair of calls, which was the net credit received for establishing the play. On the other hand, his potential risk is limited to $1.15, or the difference between the strike prices, minus the net credit.

On the technical front, K is down more than 8% on a year-over-year basis. Due to Monday's plunge, the stock is now trading beneath its 200-day moving average, which had previously served as support since mid-March.

In the opening hour of the session, K remains flat with yesterday's close of $50.70. The company is due to reveal its final first-quarter earnings before Thursday's open.