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](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
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
Click to Enlarge 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.