Rite Aid Corporation (RAD) Bears Jump Aboard After Same-Store Sales Miss

Rite Aid Corporation (NYSE:RAD) puts are accelerated after May same-store sales disappointed

by Josh Selway

Published on Jun 4, 2015 at 3:17 PM
Updated on Jun 4, 2015 at 3:17 PM

Coming into today, call buying had been the strategy of choice for Rite Aid Corporation's (NYSE:RAD) option traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 20 calls have been bought to open for each put during the past 10 sessions. What's more, the resulting call/put volume ratio of 20.08 is only 10 percentage points from an annual peak.

Also telling is RAD's Schaeffer's put/call open interest ratio (SOIR). This reading of 0.17 sits at an annual low, meaning short-term traders are more call-skewed now than at any other point in the past year.

It's a different scene entirely today, as puts are crossing at five times the expected afternoon rate. The most popular contract is the weekly 6/5 8.50-strike put. Data gives the impression of buy-to-open activity, meaning traders are betting on extended losses below $8.50 before the options expire at tomorrow's close.

This bearish action comes as the shares are down 3.6% at $8.35, after the company reported same-store sales for May that missed expectations. Still, Rite Aid Corporation (NYSE:RAD) has been strong in recent months. Since touching a 2015 low of $6.68 on Feb. 2, RAD has added 25%, and hit a 13-year high of $9.07 on April 2.


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