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Are Options Traders Betting on a Big Move in Rite Aid Corporation (RAD) Stock?
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Investors in shares of Rite Aid Corporation need to pay close attention to the stock based on moves in the options market lately. That is because the Put which expires on Mar 17, 2017 for the $6.00 strike price had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility could mean that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that could cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Rite Aid Corporation shares, but what is the fundamental picture for the company? Currently, Rite Aid Corporation is a Zacks Rank #4 (Sell) in the Retail - Pharmacies and Drug Stores industry that ranks in the bottom 6% of our Zacks Industry Rank. Over the last 60 days, our Zacks Consensus Estimate for the current quarter has risen from 2 cents per share to 4 cents per share.
Given the way analysts feel about Rite Aid Corporation right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
Looking to Trade Options?
Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the ULTA earnings report completely free. See it here: Bartosiak: Trading Ulta (ULTA) Earnings with Options or check out the embed video below for more details:
Image: Bigstock
Are Options Traders Betting on a Big Move in Rite Aid Corporation (RAD) Stock?
Investors in shares of Rite Aid Corporation need to pay close attention to the stock based on moves in the options market lately. That is because the Put which expires on Mar 17, 2017 for the $6.00 strike price had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility could mean that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that could cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Rite Aid Corporation shares, but what is the fundamental picture for the company? Currently, Rite Aid Corporation is a Zacks Rank #4 (Sell) in the Retail - Pharmacies and Drug Stores industry that ranks in the bottom 6% of our Zacks Industry Rank. Over the last 60 days, our Zacks Consensus Estimate for the current quarter has risen from 2 cents per share to 4 cents per share.
Given the way analysts feel about Rite Aid Corporation right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
Looking to Trade Options?
Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the ULTA earnings report completely free. See it here: Bartosiak: Trading Ulta (ULTA) Earnings with Options or check out the embed video below for more details: