Massive Leverage in Rite Aid Trade

A large trader apparently thinks that it’s the right time to get long Rite Aid.

optionMONSTER’s Heat Seeker monitoring program detected a highly leveraged trade in the pharmacy chain, which more than tripled in value last year. It consisted of 10,000 contracts each in the July 6 calls and the July 6 puts. The calls were bought for $0.60, and the puts were sold for the same price, so it cost nothing to implement.

The trade will track movements in RAD penny-by-penny, controlling the equivalent of 1 million shares. Profits or losses will approach infinity on a percentage basis if the stock rallies, with downside risk tied to the short puts.

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