Bears in checkout line at Supervalu

By David Russell,

Shutterstock photo

Some traders are giving up hope in Supervalu.

optionMONSTER's tracking systems detected the sale of more than 19,000 July 8 calls for $0.50 and $0.45 against open interest of just 826 contracts. The trade pushed total option volume in the grocery-store operator to more than triple its daily average.

Writing calls obligates the investor to sell SVU shares for $8 if they close above that level on expiration. Including the credit earned in the option trade, that translates into an exit price of $8.45 to $8.50 on the stock. (See our Education section)

SVU fell 2.46 percent to $7.13 on Friday and is down 13 percent in the last week. Most of that drop occurred after management cut expectations for same-store sales on Jan. 11. That raised questions about the company's ability to dig itself out from under a mountain of debt resulting from the purchase of more than 1,100 Albertsons stores in 2006.

The stock also fell after forming a double top at its 200-day moving average, which could lead some chart watchers to believe that its long-term downtrend remains in effect. Friday's calls may have been sold by investors looking to earn income on an existing position in the shares or by traders simply betting against the name.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: SVU

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