Unusual Options Activity: Seritage Growth Properties (SRG)

Retail real estate investment trust (REIT) Seritage Growth Properties (SRG), jumped over 15 percent last week following strategic asset sales and strong earnings. One trader sees further upside ahead.

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  • That’s based on the January 2024 $9 calls. With 67 days until expiration, 11,839 contracts traded compared to a prior open interest of 270, for a 44-fold rise in volume on the trade. The buyer of the calls paid $0.45 to make the bullish bet.

    Seritage shares recently traded for about $8.65 following earnings, so shares would need to rally less than 5 percent more for the option to move in-the-money.

    Seritage has a 52-week high of $12.79, well over the current strike price of the option.

    Operationally, the retail space has been hit hard with a rise in online shopping and rising interest rates. Seritage has seen a big drop in revenues, and even asset sales will lower future revenues.

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  • However, shares do trade at a 25 percent discount to their book value.

    Action to take: Shares may have gotten too oversold, too fast, and are now reversing higher. Investors could likely see double-digit gains from here in the weeks ahead as a rebound trade.

    For traders, the January $9 calls are close to being at-the-money, and could see mid-to-high double-digit returns from here. Traders should use any big one-day rally to take a quick profit.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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