To The Moon

Yesterday, the largest U.S. retailer$Walmart (WMT) $The gap opened more than 2% higher to a record high of $117.6. According to the news, Walmart will replace AstraZeneca as a constituent stock of the Nasdaq 100 Index, replacing AstraZeneca's position in the Nasdaq 100 Index. The adjustment will take effect on January 20, 2026.

Strategic trends: Cooperate with Google to launch AI shopping assistant Sparky to promote the transformation of "conversational e-commerce"; Expand cooperation with Google subsidiary Wing to cover emergency merchandise delivery across the United States.

Market sentiment and institutional views: Among the 43 institutions, 14 "strongly recommend" and 29 "buy", with an average target price of $121.71 (a 3.2% premium to the current price). The current PE is at a high level in the past five years (historical average 31.09, latest 43.42).

Wal-Mart's stock price has recently hit a record high driven by its inclusion in the Nasdaq 100 Index and the implementation of the AI strategy, but the high valuation requires subsequent performance verification.

Walmart (WMT) Bear Call Spread Options Strategy

1. Strategy structure

Investors inWalmart (WMT)Build aBear Call Spread (Bear Call Spread) strategy.This strategy consists of selling Calls with lower execution prices and buying Calls with higher execution prices at the same time, which belongs to limited returns and limited risksBearish or oscillating strategy. The core judgment of investors is that WMT is unlikely to rise sharply before the expiration date, and the upside space is limited.

(1) Sell at a lower strike price Call (main source of income) Investors sell one strike priceK ₁ = 120Call option to receive premium$1.17。 This Call is closer to the current stock price and is the main source of premium for this strategy. As long as the WMT expiration price≤ $120, the option will be completely invalid, and investors can retain all premium rights.

(2) Buy a higher execution price Call (risk protection) Investors buy one execution price at the same timeK ₂ = 125Call option, pay premium$0.25。 This Call is used to limit the maximum loss in the event of an unexpected rise in WMT, so that the risk of the overall strategy is strictly capped.

(3) Net income on the Call side (per share) Net premium = Sell Call − Buy Call = 1.17 − 0. 25 =$0.92/Share

Initial net income

Since 1 lot of options = 100 shares:

• Net premium (per share): $0.92

• Initial net income (per contract): = 0.92 × 100 =$92/contract

The initial net income is the bear market call spread strategyMaximum potential profit。

3. Maximum profit

When WMT Expiration Price≤ $120Time:

• 120 Call and 125 Call are extra-price

• Both options lapse

Investors get maximum profits:

• Per Share: $0.92

• Per contract: $92

4. Maximum loss

The maximum loss occurs when the Call spread is fully triggered, that is, the WMT rises significantly.

Strike spread width: = 125 − 120 =$5

Maximum loss (per share): = Strike spread − Net premium = 5 − 0.92 =$4.08/Share

Maximum loss (per contract): = 4.08 × 100 =$408/contract

Conditions of occurrence:

• WMT Expiration Price≥ $125

5. Break-even point

There is only one break-even point for a bear-market call spread:

Breakeven Price = Sell Call Strike Price + Net premium = 120 + 0.92 =USD 120.92

Maturity judgment rules:

• WMT < $120.92 → Earnings for Investors

• WMT = $120.92 → No Profit, No Loss

• WMT > $120.92 → Investor losses

6. Risk and return characteristics

• Maximum gain: $92/contract (limited)

• Maximum loss: $408/contract (limited)

• Profit-loss ratio: gain: loss ≈ 92: 408 ≈1: 4.43

7. Strategic characteristics and applicable situations

Strategy Characteristics

• Bearish or oscillating strategy

• The core assumption is that it is difficult for WMT to rise significantly in the short term

• Receive time value by selling Call

• The maximum risk and maximum return can be clarified when opening a position

• There is no need for the stock price to fall, as long as it does not break through the key resistance level

Applicable situationsWhen investors judge:

• WMT fluctuates or falls slightly in the short term

• Breakout unlikely before expiration$120-$125 range

• I hope to obtain premium benefits on the premise of clarifying the maximum risk