Safeway is drifting before its earnings report later this month,
but one investor apparently thinks that it will hold its ground.
optionMONSTER's tracking systems detected the sale of more than
18,000 February 20 puts for $0.20 against open interest of 1,595
contracts. Total option volume in the supermarket chain was 10
times greater than average.
Selling puts obligates the investor to buy the stock for $20 if it
falls below that level. The trader will get to keep the option
premium if SWY holds its ground. (See our Education section)
SWY rose 0.88 percent to $20.69 yesterday. The stock is down 8
percent since the beginning of the year but seems to be basing out
at $20.50, a level that appears to have provided support and
resistance at various times for the last 15 months (dark orange
line on chart).
Traders may believe that all the bad news is already priced into
the stock, which has struggled as intense competition squeezes the
industry's profit margins. They may also be heartened that SWY held
support at $20.50 on Friday despite the broader market falling
The next earnings report is scheduled for Feb. 24, four sessions
after the puts sold yesterday expire. Overall option volume in the
stock was 10 times greater than average in the session.
(Chart courtesy of tradeMONSTER)