Explained: Yesterdays Huge Call Purchase in Walgreen Company (WAG)

Yesterday afternoon we wrote about the huge buy in Aug $85 calls in Walgreens (WAG) options.  Some trader “in the know” snapped up over 25,000 of the August $85 calls while the stock was being pummeled for missing on earnings estimates.

At the time, we surmised that it was likely a leaked analyst upgrade.  So, it is not surprising that Jefferies Group announced this morning an upgrade on Walgreen Company (WAG) with a new price target of guess how much?  How about $87.00.  That’s right, they changed it from $69.00 to $87.00.

We took advantage of this insider information, by copying what this big call buyer did.  But it is amazing that the SEC doesn’t crack down on these analysts buying up options before announcing their big upgrades and price target increases.

It always pays to do what the big boys are doing when it comes to large, unusual options trades.  Just be sure to sell on the news.