When WFM (Whole Foods Market) drastically broke its long-term channel just before earnings last quarter, we wrote it off as a stock we wouldn’t be considering seriously for a while. Well, it’s officially been a while, as we were digging through options prices today looking for a decent trade. We’ve drawn an extension of this year’s regression channel, which includes all the prices from this year and sets a channel that’s based on historical volatility in the stock.
By extending this channel into the future, we’re taking a look at what the range of prices might be at October and November expiration (the vertical red lines you see on the chart). Well, there’s certainly a trend there and we’d normally be happy to pick out a trade, but the five-point-wide strikes, paired with relatively low implied volatility in WFM are making it difficult. We’ll keep looking, but for now we haven’t seen anything enticing enough to make us pull the trigger.