Whole Foods Market (WFM) Gets Walloped After Earnings Miss
With economic news light, the market has been left to deal with earnings that have been above expectations for the recently ended quarter. While the bottom lines have surprised, revenue beats have been unflattering. The growth stocks and momentum names that have missed expectations have been getting crushed and Whole Foods Market (WFM, $38.60, down $9.35) can be added to the list.
Shares are down 20% following the company’s earnings announcement after Tuesday’s close.
Whole Foods missed Wall Street’s estimates by 3 cents after reporting a profit of $0.38 a share versus expectations for $0.41 a share. Revenues also came in shy as analysts were expecting $3.34 billion compared to the $3.3 billion reported.
To make matters worse, the company lowered full-year guidance to $1.52-$1.56 a share, down from a previous forecast of $1.58-$1.65 a share. The suit-and-ties have been looking for $1.61 a share for 2014.
A nice lottery trade would have been buying the May 45 puts (WFM140517P00045000, $6.10, up $5.50) ahead of yesterday’s close as they are surging over 900+% today!
The May 40 puts (WFM140517P00040000, $1.71, up $1.65) went out at 6 cents yesterday and are up a whopping 2,750%! I have included the Yahoo snapshot of the quote (see website).
As options traders, these are the reasons we play the game.
The market is getting a mixed and has been volatile following Fed Head Janet Yellen’s comments who said small-caps might be overvalued.
The Dow is gaining 95 points to 16,496 while the S&P 500 is up a 6-pack to 1,874. The Nasdaq is down 27 points to 4,053 and the Russell 2000 is slipping 3 points to 1,104.
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