WBA is down over 63% in 2024
How the mighty have fallen. Roughly 10 years ago, Walgreens Boots Alliance Inc (NASDAQ:WBA) was knocking on the door of $100, a promising blue-chip pharmacy stock. As 2024 winds down, Walgreens stock has been booted from the Dow and holds the (dis)honor of worst-performing stock on the S&P 500 Index (SPX).
WBA is down 63.9% in 2024 and hit a Nov. 21, 28-year low of $8.08. Despite a 5.4% quarter-to-date gain, the year-end rally has the shares testing a historically bearish trendline. The stock will get a chance to bounce back, though, with Walgreens' fiscal first-quarter earnings due out before the market opens on Jan. 9.
Options traders have been loading up on calls. Over the past two weeks, according to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 32,235 calls have changed hands, compared to just 5,003 puts.
The resultant 10-day call/put volume ratio of 6.44 sits in the top percentile of its annual range, indicating that such a skew is rare in the calendar year. Given short interest is up 15.8% in the two most recent reporting periods, it's possible some of these calls could be shorts seeking an options hedge.
WBA has a mixed history of post-earnings reactions. The shares gapped 15.8% higher after the company's October report, but fell 22.2% after June's report. This time around, the options market is pricing in a 9.7% post-earnings move, which is slightly larger than the average 8.9% post-earnings move over the past two years.
It's worth noting that the stock's elevated Schaeffer's Volatility Scorecard (SVS) of 95 out of 100 implies a tendency to outperform volatility expectations -- a boon for premium players.