Bought 2 Walmart Calls

On January 30th Walmart (WMT) announced a 3 for 1 stock split. The stock will be splitting on Monday, February 26th (actually, after the close on Friday, February 23rd). Traditionally I like to play a stock that is splitting. And I’ve had great success over the years in doing so. There are 5 points I enter a trade on a splitting stock: 1) Rumor 2) Announcement 3) Two weeks after the announcement 4) Two to five days before the split 5) Post split (sometimes the stock takes a dip a few days after the split. If it does I jump in).

Today, with the stock at $175.10, I bought a 2 contract Call which is entry point #4, two to five days before the split, with the splitting date of February 26th. I plan on holding this position until the Ex-Split-Date, which is the day the stock starts trading at the new adjusted split price (Monday, Feb 26th).

Buy to Open 2 WMT 3/28/24 $175.00 C @ $3.35 ($670)

I bought a Call that doesn’t expire until March 28th for protection. If the stock doesn’t go up as planned I have a month until expiration. I would like to get out on Monday or Tuesday and get back in for a post split position if I like the way the stock is reacting to the split. This position would have an Expiration Date going out 3 or 4 months.

I bought a 2 contract Call, however, on Monday, because of the 3:1 split, I will own a 6 contract position.

Keep an eye on Walmart. Let’s hope I can make a quick 40 or 50% on my investment.

 

Successful trading,

Steve

The Options Coach