SWY – Safeway, Inc. – Shares of the North American food and drug retailer are up 1.35% to stand at $21.57 as of 11:00 am (ET) after earlier rallying nearly 3.4% at the start of the trading session to touch an intraday high of $22.00. Bullish options traders burst straight out of the gate this morning to pick up call options in the July and September contracts. One optimistic individual purchased 2,000 calls at the July $22.5 strike for an average premium of $0.375 apiece. The plain-vanilla call buyer is prepared to make money on the acquisition as long as Safeway’s shares rally 6.05% from the current price of $21.57 and trade above the effective breakeven price of $22.875 by expiration day next month. Buying interest spread to the September $22.5 strike where it looks like one investor shelled out $1.00 per contract to take ownership of 1,000 call options. The individual responsible for the purchase profits only if the price of the underlying shares rises 8.95% to exceed the breakeven price of $23.50 by September expiration. The jump in demand for call options on Safeway, Inc. lifted the stock’s overall reading of options implied volatility 7.7% to 27.16% by 11:05 am (ET).
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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