Rite Aid Corporation (RAD) Bulls Bet On a Post-Earnings Breakout

Rite Aid Corporation has a history of post-earnings swoons

by Karee Venema

Published on Dec 17, 2014 at 1:18 PM
Updated on Jun 24, 2020 at 10:16 AM

Rite Aid Corporation (NYSE:RAD) is scheduled to unveil its fiscal third-quarter earnings report bright and early tomorrow morning. Over the past four quarters, the stock has averaged a single-session post-earnings loss of 6% -- including an 18.5% plunge in September. In spite of this, calls are trading at four times the average intraday rate today, with a number of option bulls betting on RAD to buck this historical trend.

Most active in RAD's options pits is the December 6 call, where 4,086 contracts have changed hands. Drilling down, it appears a number of these positions are being bought to open, as traders roll the dice on the stock to be perched above $6 at week's end, when the front-month options expire.

On the charts, Rite Aid Corporation (NYSE:RAD) -- unlike sector peer CVS Health Corp (NYSE:CVS) -- has struggled since hitting a 12-year high of $8.61 in early June, with the shares off more than 30% to trade at $5.99. What's more, the $6 level, which coincides with RAD's 320-day moving average, as well as peak call open interest in the December series, has put a quick halt to today's rally attempt.

Daily Chart of RAD Since June 2014 With 320-Day Moving Average

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