First-Quarter Revenue Beat Revs Up Rite Aid Stock

The shares of Rite Aid Corporation (NYSE: RAD) are up a whopping 27.8% to trade at $16.46 this afternoon, soaring to a nearly two-month high, after the drugstore chain reported first-quarter losses of $0.04 per share, which were significantly slimmer than Wall Street's estimates. The firm's revenue also beat analysts' expectations. The company attributed the better-than-anticipated results to a spurt in sales of over-the-counter medicines, sanitizers, cleaning, and paper products during the COVID-19 pandemic.

There has been quite a bit of volatility surrounding RAD of late. The shares dropped to the $9 level in mid-March, only to grab an annual high of $19.92 a week later. While the equity has made several attempts to rally since, the $16.50 level has kept a lid on shares, though the 200-day moving average is providing a steady floor directly below. Nonetheless, RAD is up 132.6% year-over-year.

The options pits are exploding with activity today. So far, 64,000 calls and 21,000 puts have crossed the tape -- seven times the intraday average. The most popular position is the weekly 7/2 17-strike call, where positions are being opened. This suggests options traders are speculating on more upside for RAD in the coming weeks. 

Even with earnings volatility in play, options can still be had at a relative bargain. Rite Aid's Schaeffer's Volatility Index (SVI) of 119% sits higher than just 28% of readings from the last year, meaning options players are pricing in comparatively low volatility expectations right now.