$WMT bulls make big profits

Option traders are making big profits today on upside positions opened in Walmart (WMT) at the end of last week.

On Aug. 21, Market Rebellion’s proprietary Unusual Activiy programs found that 22,500 Weekly $135 calls expiring tomorrow, Aug. 28, were bought for $0.37 to $1.09 with shares at $131.96. This was clearly fresh buying, as open interest in the strike was only 6,330 contracts before that session began.

Those calls traded for as much as $4.75 today, at least 4 times their purchase prices. The stock rose 5.59% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

WMT was up 4.55% to $136.63 at the close this afternoon. The retail giant confirmed today that it was working alongside Microsoft (MSFT) in a potential TikTok acquisition.