July 26, 2022

Intraday Update: WMT, PARA, JWN

The news flow this week is about to go from a trickle to a stream to a waterfall. With a slower start yesterday, a busy morning of earnings today is being somewhat overshadowed by a prominent unscheduled guide lower from WMT, and stocks are moving around sharply early. More huge reports are expected after the close today (and tomorrow), so volatility and the need for more position managing are likely to increase as well.

  • WMT slashed guidance in a late filing yesterday, and the stock is indicating an open around 120. This is a very fortunate turn of events for the Aug26 strangle. The strong recent run gave an opportunity to lock in money twice on the bull portion of the strangle, and now with the huge move lower, we will have an opportunity to lock in money on the bear portion of the strangle as well. The plan will be to close the Aug26 $120 - $114 put spread during the first 10-20 minutes of the session (once bid/ask spreads fill out) and roll down to a lower debit Aug26 $117 - $114 put spread. The next target will be <117.
  • PARA was shaping up nicely as the stock was beginning to base above 25 and the 8day ema and 20day sma, but the stock caught a downgrade from Goldman this morning, and it is sliding back near 24 in the premarket. The Aug12 $27 - $30 call spread was a short-term ramp into the report idea as momentum began to turn higher, but the downgrade has disrupted the pattern, and the trade needs to be closed early.
  • We are going to adjust the action area of the JWN Sep16 $22.50 - $17.50 put spread slightly higher (if necessary) to $1.55 - $2.15. The stock was closer to 22.75-23 late yesterday but is now a little below that, so the option prices may be slightly higher accordingly.

Open Positions

* The following Open Positions pertain to the Options In Play trade ideas from this and previous editions. Disclosure of the Trader Co-Author’s actual portfolio holdings, as of the date of each publication, is made below under "Trader Author Portfolio Holdings.".

Trader Author Portfolio Holdings

**As of the date and time of publication