Unusually high put option volume in Walmart Inc. (WMT) today may signal bearish sentiment ahead of its upcoming earnings (Nov. 19 pre-market open). Other discount-store stocks like Dollar Tree (DLTR) and Dollar General (DG) are up after the elections. Is this out-of-the-money put WMT trade a bullish signal?
WMT is down slightly today at $125.02 after a recent peak on Nov. 4 of $129.17. However, it's still well up from a Sept. 30 trough of $103.92. Could it move higher? After all, its 6-month peak (see the Barchart below) is $134.20 on May 19.
Can’t Get Enough Options?: Join the list for Barchart’s daily unusual options report, delivered free.
WMT stock - last 6 months - Barchart - Nov. 9, 2026 Most don't think WMT has much upside. The average price target (PT) in Yahoo! Finance's survey of 43 analysts is $127.97. Barchart's mean survey PT is $129.13. These imply just 3.0% upside on average.
That could be why bearish investors may have initiated today's unusual WMT put trading. Or is it?
Unusual WMT Put Option Volume
This is shown in the Barchart Unusual Stock Options Activity Report today. Over 10,500 puts have traded at the $111 strike price, which is over 10% below today's price (i.e., is out-of-the-money or OTM). That volume is over 36 times the prior number of puts outstanding at that strike and expiration period.
WMT puts expiring Dec. 11, 2026 - Barchart Unusual Stock Options Activity Report - Nov. 9, 2026 The puts expire in just one month (Dec. 11, 2026). That doesn't give much time for WMT to drop 10%.
Moreover, the delta ratio is just -0.1225. That means there is an 87.75% chance WMT will not drop to $111 by Dec. 11, based on its historical trading.
This implies short-sellers initiated this put option volume. They expect to profit if WMT stays over $111 by Dec. 11.
For example, the average premium collected is 88 cents, or $88 after posting $11,100 in collateral. That works out to a one-month expected yield of 0.793%.
Moreover, if this is repeated, the annualized expected return (ER) is 9.5% (0.793% x 12).
That is much higher than WMT's existing dividend yield of 0.79% (i.e., $0.99 / $125). So, it makes sense for existing holders of WMT to sell short OTM puts to enhance their yield.
After all, the company is still profitable and generating strong FCF.
Strong FCF Prospects
Walmart's revenue rose 5.94% YoY in Q2, and its free cash flow (FCF) gained 14.68%, with a 4% FCF margin, according to Stock Analysis. Moreover, over the past year, its trailing 12-month (TTM) FCF margin was lower at 1.84%.
Analysts now project revenue to rise 5.32% YoY in Q3 to $187.23 billion, and full-year 2026 revenue (ending Jan. 31, 2027) to be up 6.52% to $752.86 billion.
Moreover, next year, they are forecasting a 4.34% gain to $785.53 billion.
Therefore, if Walmart achieves at least a 2.0% FCF margin (slightly higher than in Q2), FCF could hit $15.71 billion.
And using a 1.58% FCF yield (i.e., double the 0.79% dividend yield for a 50% payout ratio), its value could be $994.3 billion:
$15.71b / 0.0158 = $994.3 billion fair value
That is less than 1% over today's market cap of $987.83 billion, according to Yahoo! Finance (i.e., +0.655%).
So, the price target is 0.655% higher, or $133.19 per share ($125 x 1.0655).
That shows why the stock is close to its existing fair value.
Conclusion
There is no reason why WMT can't move significantly higher or lower. A lot will depend on how well its Q3 and Q4 results come in, especially its FCF margins. For example, if its FCF margin stays well over its annualized rate as in Q2 (4% qtrly margin, vs. 1.88% trailing 12-month margin), the fair value will be much higher.
But today's unusual put option volume shows that some investors think it will tank. However, short-sellers are willing to buy WMT at a 10% lower price if it drops 10% to $111 in one month.
In return, they collect an annualized 9.5% yield (if they can reproduce the same yield each month). The bottom line is that this heavy volume is likely a bullish signal.
On the date of publication, Mark R. Hake, CFA did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
Unusual Put Options Volume in Walmart Ahead of Earnings Next Week - Is WMT Set to Drop? 1 Options Trade to Bet on Cisco Stock Ahead of Earnings on November 12 — and Get a Shot at a 128.57% Maximum Payout Apple Delivers Strong Free Cash Flow, But Analysts See AAPL At a Peak - What's the Best Play? Option Volatility and Earnings Report For Nov 9-13