Chart of the Day – $WMT: Box Stored?

by Dan February 17, 2015 3:27 pm • Chart of the Day• Commentary

Walmart (WMT) reports Q4 results Thursday before the open, and the options market is implying about a 2.5% one day move which is a tad rich to the 4 qtr avg move of about 2.4%.  Back in early November WMT rallied almost 5% after reporting a beat, but issuing what some felt was cautiously optimistic guidance for the holiday season, causing the stock to breakout above $80 from a massive 2 year base : 

[caption id="attachment_51020" align="aligncenter" width="600"]WMT 2yr chart from Bloomberg WMT 2yr chart from Bloomberg[/caption]

And it wasn’t only the breakout,  but the stock kept running and has now established a new range above $85.

Options prices have been steadily increasing over the last couple months, and long premium directional strategies into earnings don’t look nearly as attractive as they have in recent quarters, as the Q3 4.7% one gain was the single largest move since 2007.

[caption id="attachment_51021" align="aligncenter" width="600"]WMT 1yr chart of 30 day at the money IV from Bloomberg WMT 1yr chart of 30 day at the money IV from Bloomberg[/caption]

Since the breakout in November, the stock has basically traded between $80 and $90, with the stock now slightly above the midpoint.  Let’s see where the stock is trading tomorrow afternoon, but playing for the stock be in this range post results with vol this elevated could be the play.

Stay tuned.