Over the past 3 days I have watched Walmart Stock and waiting for an opportunity to do more Put Selling. Walmart Stock symbol is WMT. Having sold December puts in mid-November when Walmart stock declined below $68.00 I have closed those puts and have waited patiently for the stock to pull back again.
I have little interest in owning the stock long-term, but like all stocks I do Put Selling against, I would own it if assigned and then do more Put Selling at lower strikes should Walmart stock fall lower than I anticipate.
Today’s news in the Wall Street Journal is definitely sad. They report that the factory in Bangladesh where 112 workers were killed, may have serious fire hazard safety issues that were not addressed. The owner of the factory was a supplier to Walmart Stores and as there is that connected, Walmart Stock is taking it on the chin.
It is never nice to make a profit from the misery of others. It is always a difficult choice. As these events are well beyond my control I look to my portfolio first. The only recent event that I did not immediately trade against was the 9/11 attacks. I had friends of more than 40 years, lost that day. I did not trade as the shock alone kept me stunned for several days and then I was asked to travel to be with friends in New York. As I say I find it difficult to profit from misfortune. The problem with investing though is that much of the gyrations to the markets and to individual stocks and even ETFs comes from tragedy or extreme problems. Everything from Hurricanes to Earthquakes over the last couple of years to the European meltdown has allowed for significant trade advantages.
The first in Bangladesh although centralized to one location and just one event, is nonetheless tragic.
Walmart Stock 6 Year Chart
The six month Walmart Stock shows the excellent results in the stock. Walmart stock made a giant move up starting in the fall of 2011. The key aspects lately of the Walmart Stock chart are marked in the chart.
Walmart Stock 6 Month Stock Chart
Walmart Stock Chart – Key Aspects
1. The Stock sold off recently. I sold puts in the sell-off at the $67.50 and $65 put strikes for December. All have been bought back and closed. This decline was significant and broke the uptrend in Walmart Stock. This was a long-term uptrend and is a significant warning to investors who do not want to own stock.
2. The recovery from the November sell-off was not strong and did not reach any level of resistance let alone support. Again this is a significant warning. For investors who are long Walmart Stock, anywhere in point 2 would have been a good place to sell out of the money covered calls since the chance of the stock recovering in the next several months is not great.
3. This support level from late July early August has not been recovered which again is a significant blow to the stock reaching back to recover the most recent highs.
I am Put Selling at $67.50 and $65 which is support from June 2012. Investors not interested ever in owning Walmart Stock even for a short period of time should stay clear as there is little support at the levels I am Put Selling against.
Walmart Stock Put Selling Trade Summation
All the technical indicators on Walmart stock show that the stock has remained under pressure since mid-November despite the rise in the stock back above $70.00. The recent decline while perhaps pushed beyond a norm due to the fire and tragic death of the 112 workers, was already in place and started last week. I am Put Selling more contracts at $65 and less at $67.50 which will allow me to roll lower in the event that the stock falls further than I expect, but Walmart Stock is a good Put Selling candidate and I have been Put Selling the stock since 2006. I did Put Selling throughout the 2008 to 2009 bear market and Walmart Stock held up very well as the market crumbled in late 2008 to early 2009.
That said, if Walmart stock pulls back and falls through $65 there is not much support until $60.00. Even the Put Selling levels I am selling at in Walmart Stock have very limited support. I like Walmart Stock and as such I am happy to do Put Selling against it and should I be assigned I will definitely sell covered calls and I will sell more puts if the stock declined further, to reduce my cost of stock ownership.
Like Walmart Stock itself, I am Put Selling for the long-term in this stock and until there is a significant reason to stop Put Selling Walmart Stock, I plan to continue for the foreseeable future.