The Trade: Buy 1 WFM June 35 put for 1.15 points.
Over the past 52 weeks, Whole Foods Market (WFM) has traded between $27.67 and $37.33. However, just two years ago, WFM was over $56 and four years ago was above $65. Thus, the longer-term chart and WFM's long-term believers are both found wanting.
Whole Foods has recently been in the headlines as differing analysts opinions on the shares as well as questionable takeover rumors have begun to chime into the trading activity of the stock.
Earnings growth is the big problem for Whole Foods and receding earnings the real situation. So for the company's management/board, that lack of growth is not a good thing, especially for a stock with a trailing 12-month P/E of 24 and a forward P/E of 27.
On May 10, analysts expect WFM to report March-quarter earnings of $0.37, which would be $0.07 less than the company earned in the year-earlier quarter.
Technically, WFM's chart shows rather extended one-year stochastic and RSI (relative strength index) patterns that require further buying in order to maintain both patterns at their zeniths. There is also a very large price vacuum (read: no support) all the way down to $30, if not lower.
The trade is as follows: for 1.15 points. The suggested target to close for a gain is a bid of $1.65 and the suggested stop loss target is a bid of $0.65. Best to scale into the position using limit orders.
At the time of publication, Raschke had no positions in the securities mentioned.