Rite Aid Corporation (NYSE: RAD, $8.74) is scheduled to report earnings Wednesday before the market open, kicking of the new earnings cycle.
The stock has long been a favorite of options traders, as unusual orders have been seen ahead of several major moves in the stock. Analysts are estimating EPS of $0.07 on revenue of $6.8 billion, compare to $0.06 EPS on revenue of $6.6 billion.
This Friday’s Apr Weekly RAD 8.5 and 9 Straddles are trading $0.75-$0.90, implying a move of 9.4% prior to expiration. The stock has rallied 2 of the past 4 quarters following earnings, and sold off 4 of the past 8 quarters. On average, the RAD stock has moved 12.7% on earnings.
On Wednesday March 18, a trader bought 81,302 Apr RAD 9 Calls for $0.20, representing an outlay of over $1.6 million in long premium. The next day, nearly 60k more contracts traded in this line between $0.30 and $0.35 in a series of orders.
My Trade
- Buy the Apr Weekly RAD 9-10 Bull Call Spread for $0.20
- Risk: $20 per 1 lot
- Reward: Up to $80 per 1 lot
- Break-even (stock price at expiration): $9.20
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