WMT earnings throw the gauntlet down to AMZN

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WMT had massive online earnings growth

WMT earnings showed a 40% growth in online sales.  Albeit from a smaller level than the online behemoth AMZN but still 40% growth in anything in a company as big as WMT is room for celebration.  WMT stock was in the 50s a couple of years ago when they started investing in their employees and in the short term it has paid off.  The big question is if it will pay off in the long run and I would say yes.

WMT is not WebVan

WMT is using its massive store foot print for online pickup.  I remember 20 years ago Web Van tried to take the world by storm but Web Van was lacking stores and warehouses to scale the concept.  WMT is arguably the only company that can do it besides arch retail nemesis AMZN.  The key is in the ease of pickup and no shipping.  Order the items and WMT employee brings it all to you .  When mom’s you know are using it for convenience that is game changer.

Chart from Cboe Livevol Pro

Longer Term IV is very cheap

But you ask what does this have to do with an option blog?  By some miracle of fate long term options in WMT are at 1 year lows when growth prospects are very bright.   I think that is significant because online growth can get things going in a hurry for a company like WMT.   The high of the year is around $106 and $110 is not a stretch.  $88 was the year low so we have a pretty health range if the market decides to run off of a cliff a la Dec 2018.

Think Long Term Longs

ITM call buy writes should work out ok.  WMT pays a 2% dividend so I would only write the calls into rallies like we have just had from $96..  120 day IV is so cheap now OTM call time spreads could work too as insurance is rock bottom.

Disclosure: Positions in AMZN and WMT.

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