RAD: Should We Expect More Bad News?

The Rite Aid stock price has recently dropped in a very aggressive manner on significant volume. RAD tanked initially after Walgreens dropped its merger price in mid January 2017. More selling came several days later after WBA and RAD couldn’t secure regulatory approval for the merger by January 27, 2017. As a result, the parties were forced to push back the merger deadline another six months.

As the merger uncertainly continues, one option trader remains bearish on the stock’s prospects into the summer 2017 (or at least is hedging against his long positions). The trader closed previously bought 5’500 March 5 puts and purchased 5’500 August  5 puts on Friday at 9:53am.

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The stock’s price has recently formed a very bearish pattern, in which the stock price gapped down on large volume, retraced back to the gap level on light volume and then started to sell off again.

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