Blue Chip Runs Higher on Buyout Buzz

Calls are flying off the shelves despite a choppy run on the charts

Deputy Editor
Jan 6, 2021 at 10:27 AM
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The shares of Walgreens Boots Alliance Inc (NASDAQ: WBA) are up 2.5% to trade at $42.18 this morning, after it was reported that the company is selling its Alliance Healthcare businesses to AmerisourceBergen (ABC). The deal is worth $6.5 billion in cash and stock, and gives Walgreens a chance to focus more on its core pharmacy unit and retail business.

To put it mildly, WBA has had a choppy run on the charts over the last six months. The equity fell as low as $33.36 on Oct. 31, and was trading as high as $44.87 by Nov. 16. And while the security has shed 30.6% year-over-year, it looks poised to close above its 20-day moving average for the second session, after spending considerable time below the trendline.

Switching gears, today's options pits are seeing a flurry of call activity. In the first hour of trading, over 21,000 calls have exchanged hands -- double the intraday average and volume pacing in 99th percentile of its annual range -- versus just 2,214 puts. The most popular is the weekly 01/08 43-strike call, followed by the 44-strike call from the same series. 

Today's preference for calls is nothing new, In fact, Walgreens stock's 50-day call/put ratio of 6.55 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all but 1% of all other readings from the past year. This means that options traders are picking up long calls at a much faster-than-usual clip.


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