Puts Popular Ahead of State Street's Earnings Report

But, considering the stock's technical woes, it's not exactly shocking that puts are gaining popularity. STT has shed more than 15% of its value year-to-date, and a recent rally attempt was soundly rejected by the equity's descending 50-day moving average. This closely watched trendline has highlighted STT's decline since mid-April.

In fact, after checking out the rest of the security's sentiment backdrop, it's somewhat surprising that the stock hasn't attracted more attention from the bears. Short interest accounts for just 1.2% of STT's float, pointing to a relatively slim stockpile of sideline cash.

Plus, Zacks reports that 14 out of 19 analysts maintain a strong buy or buy rating on the shares, compared to just five holds and zero sells. Meanwhile, Thomson Reuters pegs STT's average 12-month price target at $53.82 -- a lofty premium of about 46% to last Friday's close at $36.91.

Ahead of STT's earnings report, this relatively upbeat attitude raises a few red flags, from a contrarian perspective. If the company manages to report another better-than-expected quarter, there's just a little bit of room for the shares to benefit from a capitulation by bearish bettors. Unfortunately, any post-earnings rally could be halted by multiple layers of trendline resistance.

On the other hand, if STT's quarterly report comes as a disappointment, there's ample opportunity for analysts to hit the stock with downgrades and price-target cuts. If the bulls begin to abandon ship, it could easily exacerbate STT's technical troubles.

Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.