Options Traders Blast CVS, WBA Stocks on Amazon Rumors

Speculators for both CVS and WBA stocks are betting on bigger gains through tonight's close

Nov 10, 2017 at 11:17 AM
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Drugstore stocks are trading higher today, as rumors swirl that Amazon (AMZN) will not not be entering the pharmacy business. CVS Health Corp (NYSE:CVS) and Walgreens Boots Alliance Inc (NASDAQ:WBA) are among those moving higher, and call traders are blasting both stocks' options pits -- betting on even more upside through tonight's close.

Today's Pop Marks a Change of Pace for CVS Stock

CVS, for instance, has seen 8,420 calls traded so far, three times what's typically seen at this point in the session and volume pacing in the 99th annual percentile. The weekly 11/10 69.50- and 70-strike calls are most active, and it looks like new positions are being purchased here. If this is the case, options traders are eyeing bigger gains by tonight's expiration.

At last check, CVS Health shares were up 2.1% to trade at $70.48. This runs counter to the stock's longer-term trajectory, though, with the stock down 16% from its late-September rejection at $84 -- a level that has reliably contained the shares since a November 2016 bear gap. Plus, the security hit a three-year low of $66.45 on Monday.

WBA Stock on Track for Highest Weekly Close Since Early October

Almost 4,700 calls have changed hands on WBA so far -- 1.2 times the expected intraday pace, and volume on track to settle in the 92nd annual percentile. For the sake of comparison, just 711 puts are on the tape. Buy-to-open activity has been detected at the weekly 11/10 70-strike call, WBA's most active options, as traders target bigger afternoon gains for the shares.

Walgreens Boots Alliance stock were most recently seen up 1.3% to trade at $70.01, and hit an intraday high of $70.49 earlier. And while the shares appear set for their highest weekly settlement since early October, they have still shed more than 16% since their mid-September highs near $83.90. Highlighting these technical troubles, WBA stock tagged a three-year low of $63.82 on Oct. 27 -- after the Amazon buzz first hit Wall Street.


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