Hey Traders,
Markets took a walloping this week …
And one of the biggest losers was Big Box retailers, after a slew of disappointing corporate earnings saw some of the most well-known retail names miss on expectations.
But surely this is temporary, right?
Walmart (Ticker: WMT) will rise again … and Target (Ticker: TGT) will return to its former glory …?
According to this Big Money bet … these household names may actually have their work cut out for them.
Check out this $6,435,000 trade that’s betting on trouble ahead for consumer staples!
Consumer Staples Select Sector SPDR (Ticker: XLP) took the earnings misses this week especially hard.
On Tuesday and Wednesday, following the earnings miss out of Target (Ticker: TGT) and Walmart (Ticker: WMT), XLP crumbled …
The shares sank 6.3% on Wednesday, and extended their losses on Thursday …
Which is when this Big Money bettor decided to make their move.
Or rather, decided to adjust their move … and roll out an already-winning bet even further into the future.
You know I love a Big Money trader that’s already won once, and this move is especially interesting …
I mean, the sheer size alone …!
On Thursday, XLP closed at $70.55, though it managed to eke out a $70.70 close on Friday …
And this trader thinks there’s more downside to come.
First, this trader had to close out their eye-popping 55,000 contracts of the June 74/69-strike put spread.
They sold-to-close their 74-strike puts for $4.25, while buying-to-close the 69-strike puts for $1.51.
Done alone, this closeout would have netted the trader a mouthwatering $15,070,000!
And I’ll be honest, I’m impressed how well this trade worked out.
But apparently, this trader thinks headwinds aren’t over just yet for consumer staples …
Because they opened 55,000 July-dated 68/63-strike put spreads at the same time!
They purchased the 68-strike puts for $1.95, and sold the 63-strike puts for $0.78.
Now, the initial closeout more than paid for the cost of this new put spread, which would require a layout of $6,435,000.
As it stands, this trader was able to fully cover the cost of the new trade – which positions them to profit from even more XLP downside, while buying them an extra four weeks of time for it to play out — while also allowing them to pocket $8,635,000 in profit received!
The size of this Big Money trade is one notable feature …
But the part I’m most impressed with is the fact that this trader was so on-the-nose the first time around.
This is exactly the kind of trade my Big Money Flow members and I like to follow.
A trader who has deep pockets … and presumably, a team of researchers, plenty of proprietary trading tools, and expect insight into the sector they’re trading …
And who has already proven they know what they’re doing.
It’s following traders like this that has helped my Big Money Flow members and I close out seven wins out of eight trades in the last month alone.
You can join us for the next ones …
Your Only Option,
Mark Sebastian