Bears in checkout line at Safeway


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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 $0.45 respectively.

SWY 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 $22.50.

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. 24.

Overall option volume is 19 times greater than average in the name so far today.

(Chart courtesy of tradeMONSTER )

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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