Shares of retailer Walmart (WMT) have been rangebound over the past month as concerns over the economy have weighed on what’s usually a great time seasonally for retailers. One trader sees the possibility for a move higher in the coming weeks.
That’s based on the January $140 calls. With 24 days left until expiration, over 7,019 contracts traded compared to an open interest of 155, for a 45-fold surge in volume. The buyer of the calls paid $3.80 to make the trade.
With shares last trading just under $140, against a 52-week high of $152 per share, it’s likely that the trade moves in-the-money in the coming weeks.
With the recent volatility in the stock, shares are slightly down over the past year, far underperforming the S&P 500. Revenue is up less than 5 percent in the past year, and earnings are down as the company has been investing in its ecommerce presence.
Action to take: Investors may like shares here, as a stronger economy will lift shares, and a weaker economy could put more shoppers in Walmart stores compared to competitors. The stock has a slightly growing dividend with a current starting yield of 1.6 percent.
For traders, these calls look like a great way to play a year-end rally, especially with shares trading in a range for the past few weeks on a number of fears that are already fading away. Traders should look for mid-double-digit gains or better before taking profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.