Walmart Earnings Due: Bullish Option Trade For Potential Upside Move | IBD

TL;DR

Consider buying a call option on Walmart for potential profits, as the stock forms a cup with handle base and earnings are expected to be positive.

Transcript

foreign ERS for today's trade we're looking at a long call option play in Walmart which is reporting earnings on February 21st so taking a look on Market Smith shares of Walmart have been forming a cup with handle base with a 15474 entry the stock has been forming the long handle since the end of November on January 24th shares briefly spiked above... Read More

Key Insights

• 🍵 Walmart's stock has been forming a cup with handle base, indicating a potential bullish trend.
• ❓ Earnings reports are considered a significant catalyst event for stock price movements.
• ❓ Analysts expect decreased earnings but increased sales for Walmart in the upcoming report.
• 😮 Buying a call option on Walmart provides an opportunity to potentially profit from positive earnings surprise.
• 🙂 The recommended call option for this trade is the slightly out-of-the-money 146 strike call with a February 24th expiration.

Questions & Answers

Q: Why is it recommended to consider a long call option play for Walmart?

Walmart's stock is forming a cup with handle base and has recently overcome resistance, making it an attractive buying opportunity before earnings, which have the potential to drive the stock price significantly higher.

Q: What is the expected earnings forecast for Walmart?

Analysts expect Walmart to earn $1.52 per share, marking a decrease of 6% compared to the previous year. However, sales are forecasted to rise nearly 5% to $159.76 billion.

Q: What is the specific call option recommended for this trade?

It is suggested to buy the slightly out-of-the-money 146 strike call with a February 24th expiration. This trade would cost around $3.30 per contract, with a maximum potential loss of $330 if the stock trades below $146 on expiration.

Q: What are the potential profit outcomes for this trade?

Since the call option has a short expiration date and is out of the money, the maximum loss may occur if the stock does not perform well. However, if Walmart reports strong earnings and the stock price rises, the profit potential for this trade could be substantial.

Summary & Key Takeaways

• Walmart's stock has been forming a cup with handle base, with a 154.74 entry.

• The stock briefly spiked above the buy point but quickly reversed, now trading around $145.

• With earnings approaching, buying a call option on Walmart may yield substantial profits if the report is positive.