Safeway trade sees lower volatility
Chris McKhann | firstname.lastname@example.org
optionMONSTER systems detected the sale of 5,000 January 32 puts for the bid price of $1.35. This is clearly a new position, as open interest in the strike was just 704 contracts before the trade appeared.
Less than two minutes later, 160,000 SWY shares traded for $32.0625. Combined with the short puts, this creates an overall delta-neutral position that is designed to profit from volatility that comes in lower than what is implied by the options. (See our Education section)
SWY was down 0.5 percent to $31.92 yesterday, one session after seeing its highest close since June 2008. Shares of the supermarket chain have doubled in the last year.