Special Alert: Yesterday’s surge means trimming and profits for Wal-Mart calls
Key Points from This Alert:
- Following yesterday’s significant move in the Walmart (WMT) Jan 2018 80.000 calls (WMT180119C00080000) we are trimming the position size in half, selling half our calls and booking a hefty gain in just under two weeks.
- We expect further upside to be had as we enter Walmart’s seasonally strong period – the year-end holiday shopping season.
- We are boosting our stop loss on the remaining calls to 4.65 from 1.80, which will ensure a significant return.
Yesterday Walmart (WMT) held its annual analyst meeting during which it emphasized innovation, convenience, and speed to the customer as part of its focus on its in-store as well as e-commerce investments. In addition to reiterating its guidance for this year, the company also unveiled a new $20 billion share repurchase plan that is expected to span the next two years.
As you can imagine, Wall Street loved what it heard and we did too as it solidifies our view that Walmart is poised to be one of the survivors of Amazon’s (AMZN) ongoing creative destruction. Investor reaction was evident in WMT shares as they gapped up 4.5% yesterday, and this sent the Walmart (WMT) Jan 2018 80.000 calls (WMT180119C00080000) on the Tematica Options+ Select List substantially higher.
That WMT call closed last night at 5.62, up 143% from the 2.31 buy-in price, and we are going to take advantage of that move by selling half the position and booking a hefty profit in the process. As we do this we will boost our stop loss on the position to 4.65 from 1.80, which will lock in a profit of just over 100% on the remaining calls.
I suspect many are wondering why would we keep the second slug of these calls. The answer is we are heading into the seasonally strong period for WMT’s business, and our thesis that it will continue to gain market and wallet share remains intact. As such, we are retaining this portion of the position to capture additional upside before the calls expire in January.
- Following yesterday’s significant move in the Walmart (WMT) Jan 2018 80.000 calls (WMT180119C00080000) we are trimming the position size in half, booking a hefty gain in just under two weeks.
- We expect further upside to be had as we enter Walmart’s seasonally strong period – the year-end holiday shopping season.
- We are boosting our stop loss on the remaining calls to 4.65 from 1.80, which will ensure a significant return.
