Option Plays for Walmart Earnings and Beyond

This week is a slower week for earnings reports, but we still have a very noteworthy one coming Thursday morning that you don’t want to miss. This report comes from Walmart, the largest retailer in the United States. Being the largest retailer in the US, this report from Walmart will be an important indication of the overall health of the US economy, and the impacts the current situation is having on everyday Americans. It has been called the most important consumer earnings report of the season by Bill Peters from MarketWatch, and you don’t want to get caught sitting on the sidelines for this one. First, for you bulls out there, we found a 110/120 Call Spread expiring in July. Historically, the cost of this trade is slightly higher than average, but at .53c, it is still well within our ideal range. The price of the underlying equity (WMT) has had a wild ride lately. It was hit hard as a result of the liberation day tariffs but based on new global economic data and news, WMT is set to continue to grow and increase in value. The heatmap of this trade shows profitability, and we like this one a lot as we tend to do for call/put spreads, because it shows strong returns with minimal risk (premium only), and it monetizes immediately if the share price increases. On the flip side, for you bears out there, we found an 85/75 Put Spread, also expiring in July. The cost of this trade is about double its average, which is higher than we ideally like but based on the given returns and the fact that were keeping the risk limited to premium only, we still see strong value in this trade, assuming you believe the price will decrease. The heatmap shows profitability, and again what we like most about this one is the negative is limited to premium only, and it monetizes immediately, allowing an investor to take profits when the please, rather than being forced to hold till expiration. In conclusion, the upcoming Walmart earnings report is important and a big indicator of consumer health and spending, thus the strength of the overall US economy. Additionally, this is a great opportunity to make money, especially using the trades we found.

And as always, it’s better to be lucky than good, so good luck to you all.