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Why did we see a clip of two bears fighting on last Friday’s " Options Action ?"
Well, because that video basically summed up the whole show— Friday’s episode was one for the bears. And viewers must have felt bearish, too, because as of noon today, the August 65-strike Wal-Mart put that CRT Capital Mike Khouw suggested buying has traded over 3,000 contracts. That’s one-and-a-half times the morning’s total volume for all Wal-Mart puts combined in the August expiry.
The idea to get short Walmart came courtesy of Oppenheimer’s Carter Worth, who pointed out that in the previous fifteen times Walmart has exceeded its 150-moving average by more than 10%, it has declined in the subsequent three months. The stock has been on a tear thanks to low oil prices and its status as a perennial safety play. But that run could be getting a little stretched. As Khouw pointed out, the world’s biggest retailer gets much of its growth from abroad, not exactly a bastion of stability these days. Throw in the fact that Walmart is trading at a premium to the S&P, and you could be looking at stock that has come too far, too fast. Trade and breakdown are below.
MIKE’S WAL-MART TRADE
HOW MIKE’S WAL-MART TRADE MAKES MONEY
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DATA IS REAL-TIME EXCEPT NOTED WITH *
* DATA DELAYED AT LEAST 15 MINUTES