Walgreen Options (WAG): Unusual Trading Activity

| March 28, 2012 | 0 Comments

Walgreen options activityOptions in drugstore chain Walgreen (WAG) experienced a large amount of unusual trading activity yesterday.

Walgreen’s stock closed up 1.25% to $34.80 after its earnings report yesterday.  Yet, even after earnings, option traders continued to make bullish options plays.

During Tuesday’s trading session, call options in WAG outweighed put options at a nearly 3 to 1 ratio.

The heaviest activity was seen in the April $33 put strike and the April $36 call strike.

This trade is known as a risk reversal.

This strategy was placed by the sale of the April $33 strike put options for $0.18.

And then simultaneously, the same trader purchased the April $36 strike call options for $0.24.

This was done 7,000 times for only $0.06 a share… for a total cost of $42,000.

I like this trade as it offers unlimited upside potential for only $0.06 a share.

In addition, our tracking system calculates a 50% probability of making profits over the $0.06.

Obviously option traders are very comfortable with this!

As you probably know, Walgreen’s operates a chain of drugstores in the United States. It sells prescription and non-prescription drugs.  The company also sells an array of general merchandise and household products.

Yesterday’s unusual trading activity came on the back of Walgreen’s earnings announcement.

The company reported a second quarter sales increase of 0.8% to $18.7 billion from the prior-year quarter.

CEO Greg Wasson attributes this increase to, “significant progress on our Well at Walgreens’ strategy to become America’s first choice for health and daily living.”

Obviously this is what got option traders so excited.

Option traders think April’s expiration is going to be a very lucrative one. We’ll see.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.