After looking through the most active options contracts today, there was a highly unusual stand out: Kroger Company (NYSE: KR). If there is one stock that is lacking volatility and if there is one stock that most investors would guess is not going to make a huge move in either direction. Kroger would be first on the list. So why has there been a straddle or strangle trade covering 2 million shares (each 10,000 options contracts is the equivalent of 1 million shares)???
The March 2012 $22 Put options have traded a whopping 21,900 contracts versus a prior open interest of 767 options contracts. The March 2012 $25 Call options have also traded 21,258 contracts versus a prior open interest of 2,999 contracts.
The trades appear to have taken place between the bids and asks on each contract. Maybe this is bet with rising gas prices that grocery stocks will suffer, or that grocery sales will hang in there just fine this time despite gas prices causing a price hike from transportation costs.
We have not seen the same trading pattern emerge in rival Safeway Inc. (NYSE: SWY), although there have been 4,048 of the March 2012 $20 PUTS traded against an open interest of 11,115 contracts.
Not your normal options trading day for Kroger. Not at all.
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