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Rite Aid seen holding high levels

Chris McKhann (chris.mckhann@optionmonster.com)

Rite Aid is at the highest levels in nearly six years, and traders are looking for the drugstore chain to hold those those gains after it reports earnings this morning.

A block of 28,000 January 3.50 puts was sold for the bid price of $0.30, according to optionMONSTER systems. The previous open interest was just 5,973, so this is clearly a new position.

The put seller is betting that RAD will hold above $3.50 through the beginning of next year. The trader takes on the risk of having to buy shares if they are below that price. (See our Education section)

RAD was up a penny yesterday to close at $3.71 after hitting an intraday high of $3.79, its best levels since the end of 2007. Shares have been trending up from below $1 at the end of 2012.

More than 48,000 RAD options traded yesterday, compared to a daily average of just 7,506 over the last month.

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