Markets

Heavy call volume detected in Safeway

A big block of calls traded in Safeway, but it was done against shares.

A block of 8,250 April 36 calls on the supermarket chain crossed optionMONSTER's tracking systems for $1.45. That was against open interest of 6,151 and it traded at the listed ask price, suggesting that the calls were bought.

Just before the calls went off, the largest block of SWY shares traded with 825,000 went off for $37.30. The calls are in-the-money, so this could have gone off a couple of ways. It could be that the stock was bought and the calls sold as a covered call. Or the calls could have been bought and the stock sold. The former would be a short volatility play looking to earn income and expecting the shares to move slightly. The latter would be long volatility, betting on increased price swings.

Implied volatility of the calls is 16 percent, with the 20 day historical volatility at 15 percent and the 10 day reading all the day down at 5.6 percent.

SWY fell 0.56 percent to $37.30 in morning trading. It peaked at $40.25 early this month, after running up from $30 at the start of February.

Calls dominate the action in SWY today, accounting for 98 percent of total option volume.

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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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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