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Shares of Sotheby’s (NYSE:BID), an art, jewelry and real estate broker, went from $32 to $40 in early August. This was due to better-than-expected “adjusted” earnings of $1.51 a share versus expectations for a profit of $1.05 a share. Revenue of $298 million also came in $7 million higher than the forecast for $291 million.

The headline most analysts missed, however, was that net auction sales declined 16% from the year-ago period, thanks in part to the slippage in the global art market. In the previous quarter, the company missed estimates by $0.12 a share. This followed two previous earnings beats of $0.05 and $0.01 over the past year.

Buy to open the BID October 37 puts (BID161021P00037000).

The chart below shows support at $39.50–$39. A close below the latter could get $37–$36 in play. I don’t know if shares will do a total backtest to $34 and the 50-day moving average to fill the gap higher after its earnings report, but, if they do, these options could triple from here. Resistance is at $40–$40.25.

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