Pre-Earnings Bulls Blitz Rite Aid (RAD) Amid SSS Burst

Rite Aid Corporation (RAD) hit its loftiest perch in 13 years earlier

by Karee Venema

Published on Apr 2, 2015 at 11:08 AM
Updated on Jun 24, 2020 at 12:47 PM

Same-store-sales (SSS) results are hitting the Street today, and shares of Rite Aid Corporation (NYSE:RAD) are making a run for multi-year highs in the wake of a strong report. Meanwhile, in the equity's options pits, calls are crossing the tape at two times what's typically seen at this point in the day, and are outpacing puts by a 14-to-1 margin.

Drilling down, the stock's April 9 call has received notable attention once again, and it appears as if some of the activity could be of the buy-to-open kind. If speculators are indeed initiating new long positions here, the goal is for RAD to rally north of $9 -- and into territory not charted since July 2001 -- by the close on Friday, April 17, when front-month options expire.

Today's accelerated call activity just echoes the withstanding trend, as RAD's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 13.25 ranks in the 96th annual percentile. With the company slated to take its turn in the earnings confessional next week, those currently purchasing short-term premium on the security are willing to pay inflated prices. Specifically, RAD's Schaeffer's Volatility Index (SVI) of 81% rests higher than 94% of similar readings taken in the past year.

Technically speaking, the stock has been a standout. Thanks to today's 5% burst that has RAD trading near $9.00 -- after earlier hitting a 13-year high of $9.02 -- the equity has added an impressive 20% year-to-date. Additionally, Rite Aid Corporation (NYSE:RAD) has outperformed the broader S&P 500 Index (SPX) by nearly 14 percentage points over the past month.


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