Walmart (WMT) is a global retail giant that operates a vast network of discount department stores, supercenters, and e-commerce platforms.
Its core business revolves around offering a wide range of products, from groceries and apparel to electronics and household goods, at everyday low prices.
The company also runs Sam’s Club, a membership-based warehouse chain, and has expanded its digital footprint through online shopping and delivery services.
Walmart’s scale, supply chain efficiency, and aggressive pricing strategy make it a dominant force in both physical and digital retail.
Walmart has stayed above the expected range following all seven of the most recent earnings announcements.
WMT Earnings Bull Put Spread
With earnings set for November 20th before the opening bell, implied volatility on WMT stock is through the roof.
Implied volatility is sitting at 28.68% compared to a twelve-month low of 16.77%.
That means, it’s a great time to be an option seller.
If you have a bullish outlook for Walmart for their earnings announcement, then a bull put spread is a great strategy to employ.
To execute a bull put spread, an investor would sell a naked put and then buy a further out-of-the-money put to create a spread.
A bull put spread is considered less risky than a naked put, because the losses are capped thanks to the bought put.
Potential Benefits
Bull put spreads offer several advantages for options traders seeking to generate income while managing risk.
They provide a defined-risk strategy, allowing traders to know their maximum potential loss upfront.
Additionally, bull put spreads benefit from time decay, as they profit from the erosion of extrinsic value over time.
This time decay accelerates as the expiration date approaches.
Bull put spreads will benefit from the drop in implied volatility that always occurs after an earnings announcement.
Potential Risks
While bull put spreads offer enticing benefits, they also come with inherent risks.
One significant risk is the potential for substantial losses if the underlying stock’s price declines sharply.
Traders must also consider the possibility of early assignment, which can occur if the stock price moves below the short put option’s strike price before expiration.
