The retail stock is fresh off all-time highs
Subscribers to Schaeffer's Weekend Trader options recommendation service received this WMT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
Shares of Walmart Inc (NYSE:WMT) hit a new all-time high after holding the +50% year-to-date level and their 20-day moving average through six weeks of consolidation. This makes now a good time to speculate with calls.
Despite its solid technical setup, options traders are still pessimistic. This is per WMT’s 50-day put/call volume ratio of 0.77 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 90% of annual readings. History shows that elevated readings typically preceded positive price action.
There’s growing put open interest (OI) in the 78-82 strike region that could become supportive if it holds, with large overhead call strike at 90 and 100 potentially turning into magnets on a continued move higher.
Options are attractively priced right now. The stock's Schaeffer's Volatility Index (SVI) of 22% ranks in the 9th percentile of the past 12 months. Walmart stock’s Schaeffer's Volatility Scorecard (SVS) also sits at 81 out of 100, meaning it often exceeded options traders' volatility expectations in the past year.
Our recommended January 17, 2025 call has a leverage ratio of 9.4, and will double on an 10.7% rise in the underlying shares.