Safeway is attempting to lift itself after a selloff, but one
bear is doubling down.
optionMONSTER's Depth Charge tracking system detected the purchase
of 3,000 March 21 puts for $1 at the same time that 3,000 each of
the March 19 puts and the March 22.50 calls were sold for $0.30 and
The trade resulted in a net cost of $0.25 and will result in a
maximum profit of 700 percent if SWY closes at or below $19 on
expiration. It will lose money if the super-market stock goes above
The shares are up 1.93percent to $21.15 in afternoon trading but
have been trending steadily lower since early November. They
plunged on Jan. 4 after Morgan Stanley and BMO Capital downgraded
several names in the sector amid fears that higher commodity prices
would squeeze already thin profit margins.
SWY had traded around $22.50 before the cut, which could cause some
chart watchers to expect resistance at about the same level. That
could explain why they were comfortable selling the calls at the
March 22.50 strike.
The company is scheduled to release fourth-quarter earnings on Feb.
Overall option volume is 19 times greater than average in the name
so far today.
(Chart courtesy of
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