Market News

December 27, 2016  Tue 10:19 AM CT

Traders are positioning for a possible drop in Wal-Mart Stores by the spring.

OptionMonster's monitoring system detected the purchase of more than 5,600 March 67.50 puts for $1.76 to $1.87 today. Volume surpassed the strike's open interest of 2,200 contracts, indicating that new positions were established.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. These contracts are safer than shorting a stock directly, as the options limit the amount of cash that can be lost if shares rally. (See our Education section)

WMT is up 0.06 percent to $69.58 in morning trading but is down 3 percent in the last three months. The retail giant's last quarterly report on Oct. 6 was bearish, and its next earnings numbers are scheduled for release in pre-market hours on Feb. 21.

Overall option volume is about average in WMT so far today. Puts outnumber calls by a bearish 5-to-1 ratio.

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