How Walmart Call Traders Just Scored a Big Profit

WMT options traders managed to double their money in a month

by Emma Duncan

Published on Jun 27, 2019 at 1:44 PM

Subscribers to Schaeffer's Weekend Trader Alert service just doubled their money with the Walmart Inc (NYSE:WMT) September 100 call option recommendation. Below, we'll explain how this options trade hit its expected target, leaving speculators with a big win.

When we initially recommended the call to subscribers on Sunday, May 26, the shares of retail powerhouse Walmart sported a 24% year-over-year advance. Further, since having hit an all-time high in early 2018, the shares were trying to break out again, with the round $100 level seemingly stepping up as support. With multiple catalysts for another rally coming up, including the company’s shareholder meeting on June 5, WMT stock looked like a prime target for bulls.

Many analysts had been skeptical to embrace WMT shares. There were still eight tepid “hold” recommendations on the books, and the average 12-month price target of $110.54 was within striking distance. In other words, we were seeing the possibility of more brokerage firms upwardly revising their outlooks on Walmart going forward.

Volatility expectations also looked attractive, based on the Schaeffer’s Volatility Index (SVI) of 17% for WMT. The SVI ranked in the 13th annual percentile, signaling that premiums were lower-than-normal at the moment.

Following our late-May recommendation, the stock continued an impressive surge higher on the back of its grocery delivery service re-launch, a handful of price-target hikes, and the company's reassurance that tariff and trade tensions would not drastically impact its prices or profits. By Friday, June 21, Walmart stock had touched a then-record high of 112.19, easily surpassing our needed target, locking in a 100% profit in less than four weeks for subscribers.

Entry Exit Chart on WMT 2019

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