Unusual Options Activity: Walgreens Boots Alliance (WBA)

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  • At least one trader is betting that shares of pharmacy chain Walgreens Boots Alliance (WBA) will rally in the coming weeks. That’s based on the surge of buying in the December 18th $41 calls. Those options just saw a 33-fold rise in volume, going from 100 open contracts to seeing over 3,250 trade.

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  • The buyer paid about $0.36, and expire in 22 days. To move in-the-money, shares would need to rally 7.3 percent from their current price near $38.20.

    Shares recently pulled back from trading in the mid-$44 range, so the trader is likely betting on a rebound in shares in the coming weeks. Shares are still down about 36 percent over the past year. While the chain has struggled with earnings, it’s still brining in cash, and trades at 0.25 times its price to sales.

    Action to take: While shares could move in either direction in the next few weeks, the recent drop has been steep enough that shares could provide traders with a solid rebound play. That makes these December calls a worthwhile trade.

    Traders should look for mid-to-high double-digit gains on the trade, and look to exit as soon as possible. With little time left, there’s little time premium, so this trade could end up being a loser, but the reward look solid relative to the risk.

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