Amazon Rival Soars After Introducing Membership Service

The equity is up over 25% year-over-year

Fernanda Horner
Sep 1, 2020 at 10:56 AM
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The shares of Walmart Inc (NYSE: WMT) are up 2.7% at $142.57 at last check, earlier hitting a record high of $144.07, after the major retailer introduced Walmart Plus, a new membership service that will grant subscribers unlimited free delivery, fuel discounts, and no checkout lines. The service, which has been touted as Amazon.com (AMZN) Prime's rival, aims to attract both new and existing customers, and will be available Sept. 15 for $98 a year. 

The security has been soaring on the charts as of late. Shares of WMT have broken into record-high territory on multiple occasions this year, with support from the 40-day moving average. Longer term, Walmart stock boasts a 25.1% lead year-over-year.

Analysts are mostly optimistic towards the stock, with 18 of the 24 in coverage sporting a "buy" or better recommendation. On the flip side, the 12-month consensus price target of $144.75 is only a 1.1% premium to its current perch.

That optimism is echoed in the options pits, where there is an appetite for calls. WMT sports a 50-day call/put volume ratio of 5.66 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 99th percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets recently.

Today's news has the options pits exploding with  more calls. So far, 114,000 calls and 7,582 puts have crossed the tape -- three times the intraday average. The weekly 9/4 145-strike call is the most popular, followed by the 140-strike call in the same series, with positions being opened at the former. This means bulls are speculating on more upside for WMT by the end of the week.

Traders looking to speculate on Walmart stock's near-term trajectory should consider options. The security's Schaeffer's Volatility Index (SVI) of 33% is in the 31st percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectation. In other words, the stock's near-term options are attractively priced at the moment.


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