Since the Walgreens Boots Alliance Inc (NASDAQ:WBA) merger fell through, Rite Aid Corporation (NYSE:RAD) has given up the ghost. RAD stock has plunged more than 67% since June 26, when the shares popped on hopes that the deal would actually take place. Instead, to avoid regulatory hurdles, Walgreens opted to buy about half of Rite Aid’s total locations, including three distribution centers. It was not the deal investors were hoping for.

Click to Enlarge  But RAD stock is not yet ready to join the choir invisible … though it is on the verge. Throughout the Walgreens merger talks, many potential alternative suitors emerged with interest in Rite Aid, should the deal fall through. The bottom line is, as one analyst put it, Rite Aid will be profitable again, and the company could be a value play for any number of private equity firms looking for a deal.

The problem is that RAD stock isn’t going anywhere but lower until the company either offers up a plan for restructuring or another suitor emerges. And sentiment reflects that dour outlook.

For instance, Thomson/First Call reports that only seven analysts currently follow RAD stock, doling out four “holds” and just three “buy” ratings. The 12-month price target rests at a lofty $4.16 per share. Both indicators have room for movement on both sides, but given RAD’s current trajectory, downward revisions are the most likely.

Options activity may appear unusually bullish for a stock that has plunged more than 72% since the start of the year, but there are reasons. Currently, the August put/call open interest ratio arrives at 0.66, with calls nearly doubling puts among back month options.

That said, call options become increasingly popular the further a stock dips into the low single digits, as there is much greater room for a rally than there is for the shares to decline. After all, zero is not that far away, and there is considerably more upside profit to be had on any rally.

As for implieds, August options are pricing in a potential move of about 10.7% for Rite Aid stock heading into expiration. This places the upper bound at $2.60 and the lower bound at $2.12. With implieds this elevated, it’s almost as if options traders expect another suitor to emerge sooner rather than later.

2 Trades for Rite Aid Stock

Bear Put Spread: In the absence of any potential buyout offer emerging from the woodwork, RAD stock is headed lower. Traders looking to bet on the stock’s continued demise might want to consider an Aug $2/$2.50 bear put spread. At last check, this spread was offered at 21 cents, or $21 per pair of contracts. Breakeven lies at $2.29, while a maximum profit of 29 cents, or $29 per pair of contracts, is possible if RAD stock closes at or below $2 when August options expire.

Long Call: On the other hand, any restructuring news or the emergence of a private-equity suitor could send the shares soaring — especially in the current low-expectations environment. This is a risky play, but traders looking to bet on such a development might want to consider buying to open an August $2.50 call. At last check, this call was asked at 15 cents, or $15 per contract. Breakeven lies at $2.65, while a double on the trade would be realized if RAD closes above $2.80 at August expiration.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.