Whole Foods Markets (WFMI, news, chart) saw double its normal trading volume in the options market on spread trading. The stock close dup 79 cents to $22.17 after Morgan Stanley upgraded the stock to Equal Weight from Underweight. Sentiment in the optins market was mixed, with 12,000 WFMI puts and 6,100 calls trading on the day. Some of the volume was due to bearish spread trading. At about 12:45 Eastern time, an order of 4,000 September 20 puts traded offerside or for 97 cents a contract on the AMEX. The same number of September 18s traded bidside or for 47 cents a contract.
With no open interest in these puts, the action has all the characteristics of an opening bear put spread. Is so, the strategist is risking 50 cents for a max payoff of $1.50 if falls back below $18 a share.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.