Rite Aid's Sunny Forecast Attracts Options Traders

Options volume is running at 10 times the intraday average

Deputy Editor
Apr 14, 2022 at 10:29 AM
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The shares of Rite Aid Corporation (NYSE:RAD) are surging this morning, last seen up 15.9% to trade at $8.68, after the pharmacy giant reported fiscal fourth-quarter results. Rite Aid stock is brushing off larger-than-expected losses of $1.63, instead focusing on its revenue of $6.07 billion which trounced forecasts. The latter figure, paired with a sunny fiscal 2023 revenue forecast and cost reduction program, helped to give the stock a leg up today.

Options traders from both sides of the aisle are targeting RAD in response to the event. In the first hour of trading, 19,000 calls and 7,137 puts have exchanged hands, with overall volume running at 10 times what's typically seen at this point. Most popular is the April 9 call, followed by the 8 call in the same monthly series, which indicates these traders see more upside for Rite Aid stock by the conclusion of today's session.

When we last checked in on RAD, Deutsche Bank slashed the equity's price target down to $1, while the three covering analysts rated the shares a "sell." Now just two analysts are covering Ride Aid stock, with both recommending a "strong sell." It's also worth noting that short interest dropped a paltry 2.2% in the last two reporting periods, and the 17.22 million shares sold short still make up a whopping 31.8% of the stock's available float, or six days' worth of pent-up buying power. 

On the charts, the security is rebounding from an April 7 trip to nearly three-year lows of $6.11. In fact, should today's gains hold, Rite Aid stock will reclaim a familiar floor at the $8.50 mark. Still, there's a lot of ground to cover for RAD to overcome its 49% year-to-date deficit.

 

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