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Bearish traders have zeroed in on Supervalu (SVU - 5.21) today, despite the company receiving an upgrade to "neutral" from "negative" at Susquehanna Wednesday morning. Roughly 12,000 puts have crossed the tape so far, which is eight times above the norm. Close to 9,100 of these puts were exchanged at the out-of-the-money July 4 strike -- the majority of them at the ask price, suggesting they were purchased. Currently, this option holds open interest of just 311 contracts, so it can be assumed that new positions are being opened here today. In order for speculators to pocket a profit from these bearish bets, the stock must fall below $4 by the time July options expire.
This skeptical outlook on the grocery chain is further evidenced by its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio, which stands at 1.18 -- confirming that puts outnumber calls among options scheduled to expire in three months. This ratio ranks in the 88th percentile of its annual range, which means that traders have been scooping up bearish bets over bullish at an accelerated clip.
Examining SVU's technical performance, the grocer continues to struggle, having swallowed a year-to-date loss of almost 36%, and lagging the broader S&P 500 Index (SPX) by approximately 41% over the last 60 days. On the charts, the stock has been pressured lower by its 10-week moving average, which has acted as a ceiling over the equity since mid-January. In fact, SVU just tagged a new multi-decade low of $5.19 earlier today.
It also bears mentioning that the company is slated to reveal its fourth-quarter earnings on April 10, and has bested analysts' bottom-line estimates in three of the past four quarters. At last check, however, SVU is down more than 3% to hover at $5.21.