Short Seller Attack Levels Prothena; Rite Aid Stock Railed By Walgreens

With Rite Aid short-sale restricted, options volume is soaring

Jun 29, 2017 at 3:14 PM
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Stocks are wallowing in red ink, pressured by ongoing troubles in the tech sector. While drug store chain Rite Aid Corporation (NYSE:RAD) and biotech Prothena Corporation PLC (NASDAQ:PRTA) are among those making downside moves, lighting expert Acuity Brands, Inc. (NYSE:AYI) is bucking Wall Street's bearish bias. Here's a quick look at what's moving shares of RAD, PRTA, and AYI.

RAD Stock Gets Slammed After Scrapped Merger Plans

Rite Aid shares have plunged 28.9% to trade at $2.80 -- fresh off a nearly four-year low of $2.75 -- after Walgreens ended its plans to merge with its rival under intense scrutiny from regulators, choosing instead to buy about half of RAD's stores. The news is having a similar effect on shares of Fred's, which had originally been slated to purchase up to 1,200 Rite Aid stores. The company's wider-than-expected quarterly loss is only pouring salt on the proverbial wound.

Though RAD stock is short-sale restricted through week's end, today's options trading has been brisk. Roughly 181,000 calls and 123,000 puts have changed hands on Rite Aid so far, around six times what's typically seen at this point in the day. Most active is the August 3 call, which appears to be seeing a mix of buy- and sell-to-open activity.

Muddy Waters Short Position Sends PRTA Stock Spiraling

Prothena shares were down almost 10% at their intraday low, but have since pared these losses to 2.7% to trade at $53.65. The stock reacted to comments from Muddy Waters, which said the company's lead drug "does not show that it's efficacious," and unveiled a short position on PRTA. 

Muddy Waters is hardly alone in its bearish outlook toward a stock that's been chopping between $50 and $58 since early March. Short interest rose 4.25 in the most recent reporting period to 6.88 million shares -- the most on record.

AYI Stock Gaps Higher After Big Earnings Beat

Acuity Brands stock is the top gainer on the S&P 500 Index (SPX), up 7.7% to trade at $193.61. The company reported fiscal third-quarter earnings of $2.15 per share on $891.6 million in sales -- it's first beat since this time last year -- and waxed optimistic on 2018 demand. While the shares are still down 15.9% year-to-date, they're on track to close north of the 120-day moving average for the first time since late November. 

Short sellers could have a hand in today's post-earnings surge, too. Heading into today's trading, short interest accounted for 13.6% of AYI's float, or 7.9 times the stock's average daily pace of trading.

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