Will Wal-Mart momentum continue?
Wal-Mart Stores is attracting bullish option activity ahead of quarterly results next month.
optionMONSTER's Heat Seeker monitoring program shows that 5,000 February 62.50 calls were sold mostly for $3.50 and 5,000 February 66.50 calls were purchased mostly for $1.08 on Friday. Volume below open interest in the lower contracts, indicating that a bullish position was rolled to a higher strike.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Coaching section)
The company is scheduled to report earnings on Feb. 18, the day before Friday's long calls expire.
WMT rose 3.33 percent to $66.36 on Friday and is up 12 percent in the last three months. The last quarterly report on Nov. 17 was bullish. The next quarterly report is scheduled for pre-market hours on Feb. 18.
Overall option volume was twice the daily average. Calls outnumbered puts by a bullish 3-to-1 ratio.
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