Overcharging Scandal Doesn't Deter Whole Foods Market, Inc. (WFM) Bulls

Whole Foods Market, Inc. (NASDAQ:WFM) is being accused of overcharging for prepackaged food

Jun 25, 2015 at 3:06 PM
facebook twitter linkedin


Whole Foods Market, Inc. (NASDAQ:WFM) is down 0.6% at $40.79, a day after reports surfaced claiming the company has been overcharging customers for prepackaged food. One official stated that the number of violations "is in the thousands." Option traders don't seem too worried about it, though.

Calls are crossing at three times the expected intraday amount. The most popular contract is the weekly 6/26 41-strike call. By purchasing the calls to open, the traders are looking for WFM to climb atop $41 by tomorrow's close, when the weekly series expires.

This is just more of the same from the stock's option traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WFM's 10-day call/put volume ratio comes in at 2.47 -- higher than 70% of all other readings from the past year. In fact, at the beginning of the month, this same ratio registered at 0.97, meaning put buying was more prevalent coming in to June.

One group that is far from sold on WFM is the brokerage bunch. Of the 23 analysts with coverage on the stock, 13 rate it a "hold."

The stock's technical performance of late has been uninspiring, to say the least. Whole Foods Market, Inc. (NASDAQ:WFM) has been trending lower since touching an annual high of $57.57 on Feb. 19, including a post-earnings bear gap in early May. Moreover, the shares are 19% lower year-to-date, and are now testing round-number support at $40 -- a level that acted as a speed bump through most of 2014. 
 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners