$WBA bulls make healthy profits

Walgreens Boots Alliance (WBA) has made a strong comeback this week, returning healthy profits on upside option positions.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name last week on two separate occasions:

–On Sep. 23, 4,000 Weekly $36 calls expiring on Oct. 2 were purchased for $0.42 to $0.54 above open interest of 614 contracts with shares at $35.01.
–On Sep. 25, 2,000 of the same Weekly $36 calls expiring on Oct. 2 were purchased for $0.29 to $0.33 below open interest of 5,490 contracts, but appearing to add to the earlier trade’s volume, with shares at $34.81.

Those calls have traded for $0.80 today, about double their average purchase price. The stock rose by as much as 4.34% in the time frame, underscoring how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

WBA was last up 2.16% today at $36.20. The drugstore chain’s shares rebounded off of a level around $34.50 during Friday’s trade, continuing higher this session.