Wal-Mart Stores, Inc. (WMT) Collapse Sends Traders Into a Frenzy

Wal-Mart Stores, Inc. (WMT) is staring at its worst single-day performance since early 2000

Oct 14, 2015 at 11:49 AM
facebook twitter linkedin


Wal-Mart Stores, Inc. (NYSE:WMT) is getting demolished today, after Chief Financial Officer Charles Holley said he expects per-share earnings to decline up to 12% in fiscal 2017 -- a warning that's overshadowing a newly unveiled $20 billion share repurchase program. At last check, the shares are down nearly 9% at $60.80, and earlier bottomed at a three-year low of $60.12. Amid this collapse -- the stock's worst in over 15 years -- WMT's options pits are packed.

Overall, intraday volume is at eight times the usual, with calls holding a slight edge over puts. The now out-of-the-money January 2016 62.50-strike call is among the most active options, and is seeing buy-to-open activity, as long-term traders keep the faith -- expecting WMT to re-take the $62.50 level by January 2016 expiration. On the other hand, short-term bears think the shares will breach the round $60 mark by Friday's close, buying to open the October 60 put.

Certainly, from a longer-term perspective, bearish bets have been more popular than bullish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WMT's 10-day put/call volume ratio of 0.94 registers just 10 percentage points from a 12-month peak. In other words, traders have been buying to open puts over calls at a near-extreme rate in recent weeks. Along similar lines, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.87 ranks in the 86% annual percentile, hinting at a pronounced put-skew among short-term speculators.

Option traders aren't the only ones with doubts about WMT. Of the 22 analysts tracking the stock, 86% have handed out a "hold" or worse recommendation.
 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners