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Wal-Mart Stores, Inc. (WMT) Option Traders Eye a Move Higher

Wal-Mart Stores, Inc. traders bet on a breakthrough of $80

by 1/31/2014 2:56 PM
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Option Brief: Wal-Mart Stores, Inc. (NYSE:WMT) is in the green this afternoon, despite issuing a dreary fourth-quarter profit warning earlier. In the stock's options pits, calls are trading at more than four times the typical daily pace, and a number of speculators are betting on WMT to topple the round-number $80 mark over the next several months.

Heading into the final hour of the session, the most active position is WMT's April 80 call, where 6,042 contracts have traded -- mostly at the ask price. Implied volatility has ticked higher, and only 77 contracts currently make up open interest here. In other words, it seems safe to assume that new bullish positions are being initiated. Considering WMT hasn't traded north of $80 since Dec. 9, delta for the call is docked at 0.14, suggesting a slim 14% chance the option will expire in the money.

Similar to the broader Dow Jones Industrial Average, Wal-Mart Stores, Inc. has had a slow start to 2014, with the shares off about 4.7%. Longer term, however, the stock has enjoyed a lift higher from its 20-month moving average during the past three years. What's more, this trendline cushioned the equity's two most recent pullbacks.

Wal-Mart Stores, Inc. (NYSE:WMT) is slated to reveal its full quarterly earnings report the morning of Thursday, Feb. 20. This event will unofficially mark the end of the fourth-quarter earnings season.


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