Wal-Mart Stores, Inc. (WMT) Bulls Hopeful Ahead of Earnings

Wal-Mart Stores, Inc. (NYSE:WMT) calls are popular ahead of the company's earnings report next week

by Josh Selway

Published on May 12, 2015 at 11:49 AM
Updated on May 12, 2015 at 11:53 AM

Call buying has been more popular than normal on Wal-Mart Stores, Inc. (NYSE:WMT) lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the equity's 50-day call/put volume ratio of 3.24 outranks 88% of readings from the past year. This means more than three calls have been bought to open for each put during the past 10 weeks. 

Today, this trend is continuing, as the retailer's calls are crossing at twice the expected intraday pace. The stock's most popular option by far is the weekly 5/22 79-strike call, and it looks like traders are buying positions to open. By doing so, they are betting on WMT to extend its gains above $79 by the close on Friday, May 22, when the weekly series expires -- a time frame that includes the company's first-quarter earnings release, scheduled for the morning of Tuesday, May 19. 

This optimism isn't shared by analysts, though. In fact, 16 of 21 brokerage firms say the stock is either a "hold" or a "strong sell." Additionally, the shares are within striking distance of their consensus 12-month price target of $84.36. 

Looking at the charts, Wal-Mart Stores, Inc. (NYSE:WMT) is 1.1% higher today at $78.98, and is trading atop its 20- and 30-month moving averages, which have acted as support in the past. If the company can impress in the earnings booth and the stock bounces from these trendlines, the shares may be in line for some bullish analyst attention. 


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