Shop for Whole Foods Market, Inc. (WFM) Stock at a Discount

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Whole Foods Market, Inc. (NASDAQ:WFM) has had a few headlines of late with dramatic results. The company seems to be on someone’s shopping list. Luckily, in mid-February I shared a trade on how to go long WFM stock for free and it paid quickly.

WFM stock: Shop for Whole Foods Market, Inc. (WFM) Stock for Free

Normally I like to sell the range on both ends for income, as I did last November when I sold an iron condor that yielded me 25% on risk.

But this time, since there is the threat of a buyout, I will refrain from shorting WFM stock.

So with such price fluctuation, I zoom out to eliminate the short-term noise. Then I can find proven support levels against which I can sell the risk for income.

With profits in hand and with the potential buyout headlines looming, I will use a shorter time table for this trade.

WFM Stock Trade Idea


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The Bet:
Sell the WFM Aug $28 put for 55 cents per contract or better. By doing this, I am committing to owning Whole Foods shares at $28 knowing that anything below $27.45 would accrue losses for me. With a 17% buffer from current prices, this trade has an 85% theoretical chance of success.

Selling naked puts is not for everyone so I can moderate this trade by turning it into a credit put spread instead.

The Alternate: Sell WFM Aug $28/$27 credit put spread. This also has an 85% chance of yielding 25% on money risked. I do have to recognize the fact that I am chasing a spike, but in this case, I feel comfortable that $28 per share would make a decent entry point for Whole Food stock.

Learn options as easy as 1-2-3 here. Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @racernic and stocktwits at @racernic.

Nicolas Chahine is the managing director of SellSpreads.com.


Article printed from InvestorPlace Media, https://investorplace.com/2017/04/whole-foods-market-inc-wfm-stock-free/.

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