Earnings Preview: Alcoa Inc. and Rite Aid Corporation

Analyzing recent option activity on Alcoa Inc (AA) and Rite Aid Corporation (RAD)

by Griffin Kruse

Published on Apr 7, 2015 at 1:41 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings tomorrow are aluminum issue Alcoa Inc (NYSE:AA) and pharmacy chain Rite Aid Corporation (NYSE:RAD). Below, we'll gauge the pre-earnings temperature of AA and RAD.

  • The shares of AA have been sliding, down 23.8% from their three-year high of $17.75 to linger near $13.52. Sentiment in the options pits has been bullish ahead of Alcoa Inc's trip to the earning confessional tomorrow night, which signifies the unofficial kickoff to earning season. Specifically, AA's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.23 stands in the 86th percentile of its annual range. Looking elsewhere, in the session immediately following its last four earnings reports, AA has gained an average of 0.8%. Short-term options for the security are available for historically above-average prices, as its Schaeffer's Volatility Index (SVI) of 47% is higher than 68% of all equivalent readings taken over the past year.

  • RAD has been a beast on the charts, with the shares up 43.4% year-over-year to hover around $8.76. In fact, the stock notched a decade-plus high of $9.07 last Thursday, thanks to an encouraging same-store sales report. Accordingly, calls have been a popular choice in the options pits, as Rite Aid Corporation's 50-day ISE/CBOE/PHLX call/put volume ratio of 12.85 reads in the 95th percentile of its annual range. Meanwhile, in the session immediately following its last eight earnings reports, RAD has gained an average of 2.9%. Near-term options for the stock are available for relatively inflated prices, as its SVI of 84% is the highest equivalent reading taken over the past 12 months.

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