To The Moon

In the past two weeks,$Walmart (WMT) $The stock price continued its strong upward trend, and continued to attract capital inflows against the background of the overall stability of the consumer defense sector. The disk structure shows that most trading days closed in the positive range, and the price kept refreshing the stage high, reflecting the market's recognition of its fundamental stability and profit expectations. Although the trading volume did not explode, it remained at a healthy level overall, indicating that the rising process was mainly driven by continuous buying rather than short-term sentiment.

From a technical point of view, the price slope after continuous rises has obviously accelerated, the short-cycle momentum indicator has entered a high range, and the market presents a typical "trend extension stage". This kind of trend often means that bulls are still dominant, but it also increases the probability of short-term profit-taking. Historical experience shows that when prices rise rapidly in the absence of sufficient consolidation, it is easier for funds to choose phased cashing, thus triggering technical corrections or sideways digestion.

At the risk level, the current market sentiment tends to be optimistic, but the willingness to chase high levels may gradually weaken. On the one hand, the simultaneous expansion of short-term valuation and price increase increases volatility sensitivity; On the other hand, when approaching important fundamentals or macro nodes, funds tend to be cautious. If the upward momentum slows down or the transaction coordination is insufficient, the price may return to the recent breakthrough area to reconfirm the support strength.

In this environment of "the trend is still strong but the short-term is hot", some investors prefer to adopt option strategies with controllable risks and clear income ranges to express expectations of shocks or moderate decline. Among them, the bear market call spread strategy sells call options with closer strike prices and buys protective call options with higher strike prices to limit upside risks while collecting premium gains. It is suitable for judging that the stock price is difficult to continue to break through rapidly in the short term. situation. This type of structure can not only take advantage of time value decay, but also provide a relatively robust return framework when volatility returns.

Walmart Bear Market Call Credit Spread Strategy

1. Strategy structure

Investors in$Walmart (WMT) $Build a Bear Call Spread strategy on options.

This strategy is a bearish/shock strategy that collects premium, limited returns, and limited risks. It is suitable for judging the situation that the stock price is difficult to break through the upper resistance area before expiration.

1 ️ ⃣ Sell lower strike price Call (main source of income)

• Sell 1 Call with strike price K ₁ = $132

• Premium received = $1.61/share

This Call is closer to the current price and is the main source of revenue for Strategic premium. As long as the expiration price is ≤ $132, the option lapses and the investor retains all premium rights.

2 ️ ⃣ Buy higher strike price Call (control upside risk)

• Buy 1 Call with a strike price of K ₂ = $136

• Premium paid = $0.41/share

This Call is used to limit the risk when the stock price rises sharply and avoid unlimited losses caused by naked selling Call.

3 ️ ⃣ Call-side net income (per share)

Net premium revenue was:

1.61 − 0.41 = $1.20/share

This is the maximum available benefit of this strategy.

2. Maximum profit

When the Walmart expiration price is ≤ $132:

• Both Calls are out of the price

• All options lapsed

Investors retain all net premium:

• Maximum profit (per share) = $1.20

• Per contract (100 shares) = $120

📉 Conditions of occurrence: Expiration price ≤ $132

3. Maximum loss

When the expiration price is ≥ $136:

• Both Calls are in-the-money

• Strike spreads are fully locked

Calculation:

Strike spread = 136 − 132 = $4

Maximum loss (per share) = Strike spread − Net premium

= 4 − 1.20

= $2.80/share

• Maximum loss per contract = $280

📈 Conditions of occurrence: Expiration price ≥ 136 USD

4. Break-even point

Formula:

Sell Call Strike Price + Net premium

= 132 + 1.20

= $133.20

Maturity judgment:

• Price ≤ 133. 20 → Profit

• Price = 133.20 → No profit, no loss

• Price ≥ 133. 20 → Loss

5. Strategic characteristics and applicable situations

Strategy Characteristics

• Clear bearish/shock strategy

• Charge premium structure, time value benefits investors

• Maximum profit and maximum loss are determined after opening a position

• Compared with naked selling Call, the upside risk is capped

Applicable situations

When investors judge:

• Stock price is under obvious pressure around 132

• It is difficult to break through 136 in the short

• Hope to obtain stable income by selling time value

• Or establish a closing premium strategy when the implied volatility is high

The essence of this structure is:

"Use the risk of $2.80 to gain a profit of $1.20",

The winning rate is usually high, but the profit-loss ratio is small, which is suitable for a robust strategy under volatile or bearish expectations.