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Safeway(SWY) shares lifted nearly $1 on Wednesday, to close at $19.85 and options volume was five times the daily average on speculation that Canadian wholesaler Metro may seek either a grocery or pharmacy acquisition and SWY's Canadian unit may be one of several prospects. Calls outpaced puts by a margin of nearly 10-to-1 (52K calls vs. 5800 puts), and the most actives were March 20 and 21 calls with implied option volatility higher by 10% in that term. Call OI increased by 35000 contracts to 92K total.

Nabors Industries(NBR) saw an afternoon spike to $16.94 and is up $0.53 to $16.53 in active trading of 14.8 million shares after activist investor Paplona Capital disclosed an 8.8% stake in the company. 20,000 calls and 4,270 puts traded on the oil driller with February 16, 17 and 18 calls leading the action and 30-day implied volatility spiking to nearly 37% from 32% earlier in the week.

Clothing maker Chico's(CHS) is seeing elevated call volume for the third straight day as shares lift nearly 3% to $18.13, the upper third of the $11.41-19.64 52-week range. Flow yesterday was dominated by May 18 call buyers paying $1.25 for nearly 2400 contracts when shares were near $17.61, and today we see the same contract trading, with buyers paying up to $1.50 for another 3000, marked opening customer buyer according to ISE data.

CHS Daily Contract Volume

Source: Trade Alert

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Tempur Pedic


pre earnings bullish roll this morning, suggests a trader taking some gains off the table but keeping a large upside trade in place. With shares near $36.93 the trader sold 2600 February 36 calls for $3.30 (look closing from January 7 when more than 5K traded for $1.325 (vs $33.77 stock) and bought 3800 February 38 calls for $2.5125. Earnings tonight, and TPX tends to be a wild one with an average move over the past eight quarters of 11% (last quarter we saw a 19% decline!).

Zynga(ZNGA) is seeing February 2.5 call buyers this morning with shares near $2.45. The stock has not recovered much from the lows set late last year, nor have they followed Facebook's(FB) recovery, and with earnings due February 5, the buyer may be looking for a bounce.

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At the time of publication, Henry Schwartz held no positions in the stocks or issues mentioned.