Options Traders Target Rite Aid Stock After Beat-and-Raise

Options volume is running at 14 times the intraday average

Deputy Editor
Jun 23, 2022 at 10:21 AM
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Shares of Rite Aid Corporation (NYSE:RAD) were last seen 9.5% higher to trade at $7.35, following an upbeat first-quarter earnings report. Specifically, the pharmacy store operator posted smaller-than-expected losses of 60 cents per share on revenue of $6.01 billion, which also beat Wall Street's estimates. In addition, the company raised its fiscal 2023 revenue outlook, citing increased utilization of higher-cost drugs.

In response, options traders from both sides of the aisle are targeting RAD. So far, 9,979 calls and 2,731 puts have exchanged hands, with overall volume running at 14 times the intraday average. Most popular is the July 7 call, followed closely by the weekly 6/24 7-strike call. 

Looking back, options traders have targeted puts of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Rite Aid stock sports a 10-day put/call volume ratio of 1.04 that sits higher than 96% of readings from the last year. This means puts are getting picked up at a much quicker-than-usual clip.  

It is also worth noting that short interest dropped 18.8% in the last two reporting periods. However, the 13.86 million shares sold short still make up 25.7% of the stock's available float, or nearly four days' worth of pent-up buying power. 

On the charts, the security has stared up at the $7 level for the better part of the last two months, but now looks primed to break above that ceiling, should today's positive price action hold strong. The 80-day moving average, which has pressured the shares lower since January, could also be overcome today. Year-to-date, RAD is down roughly 50%.

 

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