Options Action in Walgreen Co. (WAG)

04/06/2010 12:01 am EST


Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

Drugstore chain Walgreen Co. (WAG) could be off to a positive start this week following news that its March same-store sales climbed 2.3%. Comparable pharmacy sales increased 2.4%. Non-pharmacy same-store sales increased 2.2%. Total sales rose 6.4% to $5.82 billion.

Among options players, sentiment is relatively skeptical of the drugstore giant. The Schaeffer's put/call open interest ratio comes in at 1.13, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio is also higher than 82% of all those taken during the past year. In other words, short-term options players have been more pessimistically aligned toward the shares only 18% of the time during the past 52 weeks.

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Short sellers are also betting against the security. During the past month, the number of WAG shares sold short increased by 14% to 16 million. However, this accumulation of bearish bets accounts for only 1.6% of the company's total float, offering little in the way of potential short-covering support.

Technically speaking, the stock has added nearly 3% since the beginning of the year. The equity has recently rallied off support at the 33 level and climbed back above its ten- and 20-week moving averages.

By Jocelynn Drake, contributor, Schaeffer’s Trading Floor Blog

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