Wal-Mart Options (WMT): Unusual Trading Activity

| May 16, 2012 | 0 Comments

WMT OptionsOptions in mega retailer Wal-Mart (WMT) are showing large activity today.

Don’t forget, we’re still focusing on heavy activity along with upcoming earnings.

And with WMT reporting earnings tomorrow before the open, option traders are positioning for a rise in the stock price.

Let’s remember, traders must be aware that Friday is May expiration.  However traders position for this company, their options expire the very next day.

In other words, there’s no room for error!

This market has been erratic to say the least, and options traders seem to be concerned.

So, with WMT trading at $59.63, how are traders positioning for tomorrow morning?

They’re simply buying call options… specifically the WMT May $60 contracts for an average price of $0.40 per share.

Right out of the gate today, one option trader bought 2,500 contracts of this strike.  And it cost him $100,000.

Here’s the kicker… he’s got unlimited upside potential.

Remember, options traders buy calls when they feel a stock is going straight up and they’re not concerned with limiting risk.

So what’s behind this bullish trade?

As most of you know, Wal-Mart is the largest retailer in the world with more than $400 billion in annual revenue.

The company mainly operates supercenters.  Groceries account for roughly half of total sales with the other half in general merchandise that includes items in automotive, apparel, health and wellness, entertainment, and home goods.

It all comes down to this…

I think this large call activity is due to analysts’ expectations for upcoming earnings and the recent strength in the consumer staples sector.

So, as we anxiously await earnings tomorrow, let’s hope options traders are correct and this solid mega-cap company moves higher.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.