Trade Update - Wal-Mart

Trade Update - Wal-Mart

Hello Smart Option Sellers! Let's go over what happened on Friday with our new put-sell play on WMT. As mentioned in Friday's alert, Amazon (AMZN) decided to buy out Whole Foods Market (WFM) for $42 per share. This sent shockwaves through the whole food & grocery sector, causing all the main players to see significant share price drops. Major retailers that sell food items - Target (TGT), Wal-Mart (WMT), Costco (COST) and Kroger (KR) all got hit on Friday (as well as others). Since I believed this was an overblown situation, it led me to a logical decision to enter a new put-sell position on the biggest physical retailer on the planet - Wal-Mart (WMT). WMT stock was down $5 per share near the open of trading, and you know how I love it when high quality stocks have big drops like that. It makes for great opportunities for us, as we can take advantage of an overblown situation. But, once people come to their senses and realize the move was not warranted, the stock usually starts to move back up in the following days, and sometimes within hours. Not only can the stocks move back up, but the volatility that causes the option prices to spike initially, can come back to earth as well, taking the option prices back down with it.