At the company’s second quarter earnings they announced that profits fell but this could be attributed to the tax charge for selling its operations in the company’s Canadian branch. Overall sales had decreased by 1.6% to $8.7 billion, which fell short of the analyst’s estimates at $10.5 billion. However, the company was able to beat their expectations of earnings per share by 1 cent, coming in at $0.51. The stock has recently improved and this is due to the announcement of same stores sale growth along with its success from organic products and store remodeling.
Safeway has recently agreed to sell its Canadian operations to the company Sobey, which is a large grocery chain in Canada for $5.8 billion. The proposed deal is expected to go through by the end of Q3 and Safeway is planning to use the proceeds for share buybacks along with reducing debt.
Unusual Option Activity:
We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.
Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .
Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.
The “Institutional Trade”: Today a trader bought 7500 SWY Aug 27 Calls for $.55 total
Their Risk: $55 per 1 lot
Their Reward: Unlimited
Their Breakeven: $27.55
Cash Outlay: $412,500
My Trade: I bought the SWY Aug 27 Calls for $.55
Risk: $55 per 1 lot
Reward: Unlimited
Breakeven: $27.55
Greeks of this Trade:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long