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July 5, 2013  Fri 4:45 AM CT

WFM: SEE CHART GET CHAIN FIND STRATEGIES
Short-term traders are betting that Whole Foods Market will rally by the end of next week.

More than 1,500 Weekly 55 calls that expire on July 12 traded with a bullish bias on Wednesday for prices ranging from $0.11 to $0.20, optionMONSTER's Heat Seeker system shows. These are all new positions, as there was no open interest in the strike before the trades appeared.

WFM rose 0.35 percent to $53.03 on Wednesday, not far from its all-time high of $53.60 reached on May 28. The upscale grocery chain gapped up from below $47 on a strong quarterly results early last month and has been trading sideways since.

The calls bought on Wednesday, which lock in the purchase price for the stock, are looking for WFM to rise above $55 before they expire a week from today. The company is scheduled to release its next earnings report on July 31, 2-1/2 weeks after those calls expire. (See our Education section)

Total option volume in the name on Wednesday exceeded its full-day average even in the truncated trading session. Overall calls outpaced puts by a bullish 6-to-1 ratio.
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Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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