Schaeffer's Top Stock Picks for '25

Walgreens Boots Alliance Stock Options Hot After Dow Addition

Options traders have targeted WBA's July 62.50 put in recent weeks

Jun 20, 2018 at 9:52 AM
facebook X logo linkedin


Following recent headlines that Twitter (TWTR) joined the S&P 500 Index (SPX), news hit last night that Walgreens Boots Alliance Inc (NASDAQ:WBA) will replace General Electric Company (NYSE:GE) on the Dow Jones Industrial Average (DJI) ahead of the open next Tuesday, June 26 -- ending the latter's 110-year run as a member of the 30-stock index. This is also the first change to the blue-chip index since Apple (AAPL) joined the Dow back in 2015. WBA stock has had a rough 2018, but is signaling a positive start today, trading up 3.4% at $66.80.

Looking closer at the charts, Walgreens shares had shed 20% since hitting their year-to-date high near $81 back in late January -- a region that coincided with their 320-day moving average at the time -- based on last night's close at $64.61. The stock has been ushered lower by its 80-day moving average since early February, and this trendline could come into play today, with it last seen at $65.45.

Sentiment among options traders has been relatively complacent, with total open interest of 159,140 contracts ranking in just the 1st percentile of its annual range. By comparison, open interest hit a 52-week peak of 475,137 contracts on Dec. 15.

Drilling down, the January 2019 85- and 87.50-strike calls are WBA's top two positions, where nearly 28,000 contracts reside. The bulk of this options were initiated last October when GE was trading near $64.50, though it's not clear whether they were bought or sold.

Among shorter-term strikes, the July 90 call is at the top of the list, with 10,325 contracts outstanding here, though most of these contracts were opened in early December. More recently, options traders have targeted July 62.50 puts -- which have seen the biggest increase in open interest over the past 10 days. Data from Trade-Alert suggest most of these options were sold to open yesterday.

If this is the case, traders could rest easy knowing WBA stock has consistently rewarded premium sellers over the past year. The security's Schaeffer's Volatility Scorecard (SVS) of 34 indicates Walgreens Boots Alliance has tended to make undersized moves over the past year, relative to what the options market has priced in.

Today, call traders are active out of the gate, with 4,123 contracts traded already -- compared to an average daily volume of 3,507 calls. The weekly 6/22 67-strike call is most active, and it seems safe to say new positions are being purchased for a volume-weighted average price of $0.38. If this is the case, breakeven for the call buyers at this Friday's close is $67.38 (strike plus premium paid).
 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

10 Stock Picks FREE
 
 

Featured Articles from Trusted Partners:

🚀 One Stock Pick Could Change Everything in 2025
What if one stock pick could define your success next year? Get 10 expert-vetted stocks set for 2025—plus 5 bonus picks to watch now. Get the Report →

🆕 New Options Need New Trading Strategies
Zero-DTE options are the newest (and hottest) options to trade.  Professional traders have rushed into the market and are making a mint.  Don’t get left behind - learn all about these options, how to trade them, market setups to profit from, plus much more. Download now →

👀 Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter