Bullish Investor Buys Supervalu Options

OptionMonster co-founder Pete Najarian provides options picks Monday, Wednesday and Friday in TheStreet.com's Deep in the Money Calls newsletter.

David Russell, reporter for OptionMonster.

EDEN PRAIRIE, Minn. (TheStreet) -- Supervalu(SVU Quote) has been outperforming other grocery stocks recently, and now at least one investor is looking to get long before the next earnings report.

Volume in the January 17.50 calls rose to 4,200 against open interest of 3,743 contracts, according to OptionMonster's tracking programs. Most of the trades priced at 55 cents and purchases dominated the activity.

Supervalu fell 1.8% to $14.93 in morning trading. The stock is up 16% in the last three months, compared with a 6.7% drop by Kroger(KR Quote) and a 3.6% decline for Safeway(SWY Quote) over the same period.

Supervalu needs to rally 21% by expiration for the calls purchased today to turn a profit. The company, still laden with debt from its purchase of Albertsons locations in 2006, has been climbing despite lowering its profit forecast on July 28. The next earnings report is expected to come out about Oct. 20.

Overall options activity in the name was five times greater than average, with calls outnumbering puts by more than 70 to 1.

-- Reported by David Russell at OptionMonster in New York.

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