Our October 14 Tear Sheet highlighted an opportunity for a bond-replacement option investment in Wal-Mart (WMT) after it had reported disappointing quarterly results and fell heavily. We chose to sell the put expiring this December, and this option expired last Friday.
At today’s closing price of $59.57, we are able to realize a profit of $1.92 per share, which equates to a percentage return of 3.2% over 60 days – slightly worse than we had hoped for but much better than the 60-day yield on a bond of a company as strong as Wal-Mart!
Like a gift that keeps on giving, Wal-Mart is again bouncing around an investable price, so we will publish a new Tear Sheet. For investors in the October strategy, you can either choose to
- Sell the shares and book the profits
- Sell a call option to extend the investment for another few months, or
- Simply continue to hold Wal-Mart shares in expectation of capital appreciation.
We will post articles for both October investors and December interested parties this week.