Sarah Wasserman (swasserman@sir-inc.com) On Nov. 3, Whole Foods Market, Inc. (WFMI) reported consensus-beating fourth-quarter earnings and lifted its fiscal year guidance, which caused the shares to gap sharply higher the following day. Since then, WFMI has been consolidating in the $45 to $47 region while its 20-day moving average, now located just below $45, catches up with the shares. Going forward, a bounce off this trendline could ignite the next leg of WFMI's uptrend.
However, it appears that put players are actually betting against the organic grocer, as evidenced by today's activity at WFMI's December 44 put. Over 1,100 contracts have changed hands on this strike -- 95% of which traded at the ask price, suggesting that they were likely purchased. With just 667 contracts currently open at this strike, it appears that fresh positions are being added here today. By buying to open the December 44 put, these option speculators are betting that WFMI will backpedal beneath the $44 level over the next month.
In fact, put players have ramped up their exposure to WFMI lately, as evidenced by the equity's 10-day International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) put/call volume ratio of 1.4, which ranks above 67% of all other readings taken during the past 12 months. In other words, speculators on the ISE and CBOE have initiated bearish bets on WFMI at a faster-than-usual pace lately.
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