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Put Options on WFM on 6/1/2015

Bearish Flag on WFMWhole Foods Market, Inc. (WFM) operates as a retailer of natural and organic foods.

The company’s stores offer produce and floral, grocery, meat, seafood, bakery, prepared foods and catering, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, and body care products, as well as lifestyle products, including books, pet products, and household products.

As of May 7, 2015, the company had approximately 417 stores worldwide.

Shares have formed a bearish "flag" following the Company's recent quarterly report. The Austin, Texas-based company said it had net income of 44 cents per share. Earnings, adjusted for non-recurring gains, came to 43 cents per share. The grocery chain posted revenue of $3.65 billion in the period, missing estimates of $3.71 billion. The slow down came amid reports that Costco now sells more organic foods that Whole Foods as other retailers such as WalMart and Pubix are cutting in the company's market share. Whole Foods also announced launch of a new cheaper version os its 's brand for younger shoppers. Market has reacted to the spin-off as a possible canabilizing of the company's sales.

Lower share prices are expected for this stock. We are buying a July 17th $42 Put  on the stock.

52-Week Trading Range: $36.08 - $57.57

Last Trade: $41.31

Trade

  • Buy 1 July $42.00 Put at $1.10
  • For a net debit of $1.10

Profit/Loss Analysis

  • Breakeven at $40.90
  • Maximum profit is unbounded
  • Maximum loss is ($110.00) at strike of $42.00

Closing Summary

  • Sold 1 July $42.00 Put at $2.25

Position closed on 6/5/2015 at price of $2.25 with a 104.55% gain in 4 days.

Updates

6/5/2015 1:15:52 PM

We are closing the WFM  $42 Put opton at $2.25.

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