Shares of Safeway have run into strong overhead resistance, but one trader is betting that the stock will hold above a key support level.
optionMONSTER's tracking systems detected the sale of 2,190 March 16 puts in less than 2 minutes this morning, mostly for $0.70. The volume was well above the strike's open interest of 886 contracts at the beginning of the day, signaling that this is a new position.
SWY is up 0.62 percent to $17.76 in early afternoon trading. The supermarket chain rose sharply with bullish option activity earlier this month as it broke above the $17 level and moved up the payment date for its quarterly dividend. Since then, however, the stock has been trapped below resistance at its 200-day moving average.
Today's short puts are looking for SWY to be above the $16 strike price at expiration in mid-March, a level that has served as support at various times in the last five months. The trader is also on the hook to buy shares if they are below that level at that time, though the effective price would be $15.30 once the credit from the put sale is factored in. (See our Education section)
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