Bearish Hedged Play on Whole Foods Looks Good After Earnings

5/14 - "For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $37 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in three months as long as WFMI is below $37 at August expiration. Whole Foods would have to rise by more than 26% before we would start to lose money."

"This trade could be risky if the company's next earnings (due out in early August) are a positive surprise, but even if that happens, this position could be protected by resistance WFMI might find around $35, where it has topped out twice in the past two months."