Supervalu has fallen to its lowest level since January, and now
one big investor is looking for a rebound.
optionMONSTER's tracking programs detected sale of 4,500 June 12.50
puts on the supermarket chain, most of which priced for $0.40. At
the same time, a matching number of June 15 calls was purchased for
about $0.14. Volume was more than five times open interest in both
strikes, and the transaction generated a credit of $0.26.
SVU rose 2.88 percent to $13.23 on Friday but is down 18 percent in
the last month. The shares have been plunging since April 20 when
management issued a weak full-year forecast and said improvement
will be a "long-term process."
Despite the drop, the debt-laden company has returned to a level
where its stock gapped higher early in the year. If it holds, it
would mark the fourth higher low since SVU traded below $10 in
November 2008. Some chart watchers may consider that evidence of a
Friday's option trade, known as a bullish combination, is a
relatively low-risk attempt to profit from a rebound in the stock.
The investor can only lose money if SVU falls below $12.50 by
expiration and stands to make unlimited profits if it climbs above
$15. Between the two prices, they simply keep the $0.26 credit.
The next scheduled event that could serve as a potential catalyst
for Supervalu is an appearance at the Citi Food & Drug Retail
Conference on May 25 at 9:30 a.m. ET.
The trade pushed total options volume in SVU to seven times greater
(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 The NASDAQ OMX Group, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.