Options Traders Respond to Rite Aid's Revenue Miss

Options volume is pacing at 25 times the intraday average

Assistant Editor
Jun 24, 2021 at 10:16 AM
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The shares of Rite Aid Corporation (NYSE:RAD) are sitting out the broad market rally today, last seen down 14.3% to trade at $17.48 after the pharmacy giant reported lackluster fiscal first-quarter results. Though Rite Aid saw earnings of 38 cents per share -- well above Wall Street's estimates of 16 cents -- revenue fell far short of expectations due to a weakness in the pharmacy services business.

Options traders from both sides of the aisle are responding in kind. In the first hour of trading, 14,000 calls and 7,897 puts have exchanged hands, volume that's 25 times what's typically seen at this point. Most popular is the weekly 6/25 23.50-strike call, followed by the 16-strike put from the same series, with new positions opening at the latter.

An unwinding of optimism in the options pits could put pressure on the equity. Rite Aid stock's Schaeffer's put/call volume ratio (SOIR) of 0.38 stands in the extremely low eighth percentile of its 12-month range, meaning short-term options traders have rarely been more call-biased. 

On the charts, today's drop was saved by the $17 level, an area that's served as a floor in recent months. While the stock is still up 35.6% year-over-year, RAD is pacing for its largest single day net loss since March 25.

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