Caution reins in Safeway at highs

By
A A A

Safeway has rallied back to a key level from the financial crisis half a decade ago, and traders are getting nervous.

optionMONSTER's Depth Charge tracking program detected the purchase of 5,100 December 28 puts, most of which priced for $1.74 and $1.79. Volume was more than 12 times previous open interest at the strike, indicating that new positions were initiated.

Puts lock in the price where shares can be sold in the supermarket chain, giving them an inverse correlation to the stock. Investors use them to protect long positions or to wager on a drop without the risk of shorting. (See our Education section)

SWY is off 0.14 percent to $28.24 but leapt more than 6 percent on Friday after receiving a two-notch upgrade from Credit Suisse. That brought it back to the same price range where it peak in August 2008, shortly before the subprime mortgage crash, which could make some chart watchers think it's now at resistance.

Total option volume is more than twice the daily average so far, according to the Depth Charge. Puts outnumber calls by almost 7 to 1.



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

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


This article appears in: Investing , Options

Referenced Stocks: SWY

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

67%

Most Active by Volume

183,639,073
  • $42.32 ▲ 3.85%
82,623,623
  • $15.99 ▼ 22.79%
39,547,942
  • $119 ▲ 1.19%
32,107,751
  • $77.62 ▲ 2.63%
29,684,848
  • $10.60 ▲ 2.02%
27,615,309
  • $24.03 ▲ 0.38%
26,917,669
  • $31.10 ▲ 2.07%
26,464,306
  • $47.75 ▲ 0.59%
As of 11/26/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com