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Buy Call WMT

June 4, 2024
Sell a Third of Existing Position: Sell a Third of WMT January 65 Calls for $5.10 or more

Despite some wobbles under the surface of the market WMT stock continues to grind higher. And while I really like the way WMT is trading, today we are going to stick to the system, lock in a profit of 20% on the first third of our position and then go for greater gains in the weeks/months to come.

To execute this trade you need to:

Sell to Close a Third of your WMT January 65 Calls

May 17, 2024
Two Trades: Sell your RSP June 158 Calls for $10.20 or more, and Buy the Walmart (WMT) January 65 Calls (exp. 1/17/2025) for $4.80 or less.

Today we are going to make two moves …

First, we are going to sell our RSP calls for a profit of approximately 33%, as time is becoming an issue with this trade, and I want to move the capital into a fresher idea.

To execute this trade you need to:

Sell to Close your RSP June 158 Calls.

Next …

As I noted yesterday, Walmart (WMT) surged higher on earnings yesterday, and following that report the company/stock is getting glowing reviews from Wall Street (more on that below). In addition, since that earnings move option order flow has been very bullish, and finally the price of WMT calls are extremely inexpensive. Let’s get involved with a January call position.

To execute this trade you need to:

Buy to Open the WMT January 65 Calls.

The most you can lose on this trade is the premium paid, or $480 per call purchased.

The risks I see in this trade are largely market and sector related. Also, it’s possible that WMT may need to “chill out” after its big move higher yesterday.

That being said, I like this set-up a lot, and to pay $4.80 for eight months of exposure to an earnings winner is a great risk/reward.

Finally, here are a couple of the analyst upgrades following earnings:

Morgan Stanley raised the firm’s price target on Walmart to 70 from 67 and keeps an Overweight rating on the shares. Top-line growth and market share gains validate Walmart’s investments in store and online, in grocery and across general merchandise, and with both lower and upper income shoppers.

BMO Capital raised the firm’s price target on Walmart to 75 from 65 and keeps an Outperform rating on the shares. The company’s Q1 results saw a “strong beat” and gross margin expansion above expectations across all three of its business segments. Walmart commentary and disclosures – including improving Ecommerce losses, strong gross margins and price positioning – provided further evidence that momentum may continue, Investors should give the retailer credit for creating a “significant moat” thanks to its omni-channel investments and high-margin initiatives.

PositionWMT January 65 Call
Position StrategyBuy Call
Opened DateMay 17, 2024
ExpirationJanuary 17, 2025
Net Price4.35
Jacob Mintz is a professional options trader and editor of Cabot Options Trader. Using his proprietary options scans, Jacob creates and manages positions in equities based on unusual option activity and risk/reward.