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Walmart earnings week sees heavy options interest in bull put spread trade
Walmart is scheduled to report earnings on Aug. 20 before the market open, with implied volatility on WMT described as elevated heading into the announcement.
Walmart earnings are set for Aug. 20 before the market open, and ahead of the print, options activity is drawing attention, with a focus on a bull put spread trade idea for investors with a bullish outlook. Yahoo Finance notes that Walmart has remained above the expected range after five of its last seven earnings announcements, a backdrop that has fueled interest in the strategy.
The bull put spread is described as a defined-risk options approach that involves selling a put and buying a further out-of-the-money put to cap potential losses. The outlet also highlights that the spread can benefit from time decay, since it profits from the erosion of extrinsic value as options move through time.
According to Yahoo Finance, traders may also consider that implied volatility often drops after an earnings announcement, which can benefit this structure. The article cautions, however, that large losses are still possible if the stock falls sharply, and it notes the risk of early assignment if WMT moves below the short put strike before expiration.