Walgreens Boots Alliance Inc (WBA) Options Heat Up on M&A Chatter

Walgreens Boots Alliance Inc (WBA) options pits are buzzing amid reports that its Rite Aid Corporation (NYSE:RAD) acquisition will get FTC clearance

Jun 10, 2016 at 3:18 PM
facebook X logo linkedin


Walgreens Boots Alliance Inc (NASDAQ:WBA) is 3.9% higher at $82.11, after a report in the New York Post said that the company’s pending $17 billion acquisition of Rite Aid Corporation (NYSE:RAD) is likely to be approved by the Federal Trade Commission (FTC). While the stock treads higher -- bucking the broad-market sell-off -- WBA's options pits are buzzing once again.

WBA options are changing hands at five times their average intraday rate, with calls firmly in the lead. The most active option of the day, however, is the June 77.50 put, where it appears buy-to-open action may be happening. If that is the case, buyers of the put are either betting on WBA to make a quick, sharp drop, sinking below the $77.50 level before next Friday's close, when the front-month option expires, or they're WBA shareholders buying this out-of-the-money put to hedge against downside risk.

On the other side of the coin, it looks like some traders may be purchasing new positions at the WBA July 90 call, expecting the shares to make significant gains over the next five weeks. And these calls are less likely to be of the protective variety, given that short interest on WBA fell by nearly 20% during the two most recent reporting periods. In fact, these bearish bets currently represent just 1% of the stock's available float.

Overall, sentiment toward WBA has been distinctively bullish of late. Calls nearly double puts among WBA options expiring in three months or less, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.51. Moreover, this reading sits just 8 percentage points from a 12-month low, indicating that near-term traders have rarely been more call-skewed.

The brokerage crowd also holds a relatively upbeat outlook on WBA, with 12 out of 17 analysts rating the shares a "buy" or better, and not a single "sell" to be found. Plus, the average 12-month price target of $94.27 sits at a healthy 15% premium to the stock's current value.

Walgreens Boots Alliance Inc (NASDAQ:WBA) is set for its highest close since early April. While the security is still sitting nearly 4% shy of breakeven for 2016, it's making a strong attempt to close above its 200-day moving average for the first time in more than two months.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI