How I Bought Walmart for $4,050 Instead of $10,700 (Deep-In-The-Money Calls)

Okay, I just saved over $6,600 on Walmart. And I'm not talking about buying items in the store. I'm talking about an investment where instead of paying almost $11,000 to buy a 100 shares of Walmart stock, I spent just a little over $4,000 on my what's called my deep in the money longdated call option strategy that goes out to December 2028. So about 2 and a/4 years from now, I have time for this trade to play out. And on top of that, I sold a shorterdated call option against that long far-dated deep in the money call option to generate income for myself. And I invoked what's called the poor man's covered call strategy. So in this video, I'm going to show you why I personally chose to get chose to invest in Walmart. We're going to look at the stock chart. We're look at the option chain. I'm going to show you the exact option trade that I did, both the long and the short calls, and I'm going to show you why I'm really interested in Walmart for the long run. In addition to that, I'm going to show you the the Excel spreadsheet that I have and a PDF that that you may be interested in. Okay, so let's just jump right in and get to it. All right, everyone. Leel here from smart optionseller.com. So, we're talking about Walmart. We're talking about how I saved over $6,600 buying a deep in the money longdated call option instead of buying shares of stock. This is a this is the bullish strategy that I use anytime I'm really bullish on a stock and I want to go in for the long haul. I'm not buying 100 shares of stock. I'm buying a deep in the money longdated call option. Now, I just want to show you why I'm interested in Walmart, my reasoning, and then we're going to look at some more of the numbers. Now, what you see in front of you is a chart of Walmart. Let's go back to the monthly chart here. Okay? So, we can see Walmart and this is a chart going back to the early 1980s. Walmart going up up up all-time highs just very recently and has come back has a nice nice pullback here. Now, Walmart had earnings very recently. You can see the gap right here. Closed here one day and then it opened here the next day. So, this was just all in the last week or two. Now, I know Walmart. I'm sure many of you shopped at Walmart. It is the number one the largest physical retailer on the planet, but they they price their products so cheaply enough that most people can afford to go into Walmart and buy their products. Now, obviously over the long run, their earnings have been great, revenue has been great, and that's the reason why the stock chart keeps going upwards. So, whenever Walmart has some kind of pullback, and this is a pretty meaningful pullback right here, I want to get in for the long run. Meaning, I'm not here for a oneweek trade on Walmart. I'm here for a long expiration type of trade on Walmart. And so, this is the reason why I bought a December 2028 call option on Walmart. And when you buy call options, it's a bullish strategy. So, you are expecting the stock to go up over time since, you know, on a day-to-day basis, any stock could have random movement. It can go up, down, sideways, whatever. But I know in the long run, Walmart will go back up again. So, that's why I'm taking a long-term approach. And the reason why I'm not buying a 100 shares of the stock is because I'm buying these deep in the money call options that will give me almost point for-point movement with the stock. And it's going to save me, as I said, over $6,600. I'm going to show you all the numbers, but first I wanted to show you the stock chart. Yes, Walmart is currently in a pullback here. It's starting to to move up here over the last week. Also, the RSI indicator that I used down here. Got very oversold. Okay, even with the stock price moving down, you can see the RSI is just starting to rise up. That's called bullish divergence. So, I'm in. This is where I I chose to get in long on Walmart. This is not me telling you to do this. This is not a recommendation. This is just what I personally have done. Okay, so Walmart's around $107 a share. If you were to buy a 100 shares, it would cost you $10,700. So, let's just jump into the option chain here so I can show you what it looks like. I'm going to show you my actual trade. Then, I'm going to show you the Excel spreadsheet so you can see how all the numbers work out. Okay, so this is an option chain for Walmart. I've got the December 15, 2028 options pulled up. That's the longest expiration date that that is available for Walmart. Okay, you can see it goes all the way out to December 2028. And he's now the the closest expiration is September 11th, 2026. So, I want to go longterm. Now, the way that I the way that I um do my deep in the money long call option trades is that I'm looking for trades I'm looking for options that have at least a 90 delta. Okay, deltas range from zero to 100 and deltas tell you how much the option price is going to move along with how the stock price moves. The higher the delta, the more the option price is going to move when the stock price moves. In my opinion, 90 delta is the sweet spot to potentially um look for when you want to buy call options. Now, what you do is you go, you open up your option chain for whatever month you're interested in. You have your strikes here. Make sure you have the delta column in your option chain here and you look for the strike that's closest to 90 delta. Now, at the time that I made the trade, the 75 strike had very close to a 90 delta. So, that's the the option that I chose. Okay, that's you know, as I said, 90 delta is what I shoot for. What does 90 delta mean? Again, it means the option price, which is over here in the bid ask column. That means when the stock moves, the option price is going to track it by about 90%. So if the stock goes up a dollar, your option value should go up about 90 cents per contract. Now you can see the deltas here, uh, these 75 deltas have about an 88.8% delta. And if you scroll up in the chain, as the strike prices get higher, you can see the deltas get smaller. So for you to choose this um 170 call has a 25% delta. That means if Walmart stock goes up by a dollar, the option price should go up by about 25 cents. Okay. So I'm choosing high deltas, 90 deltas, cuz I want the option price to move when the stock does. Now what is deep in the money actually mean? That means that's just where the placement of the strike price is compared to where the stock is. So if Walmart's at $107 right now, the strike price, the deep in the money strike price is well below that price of the stock. So Walmart's at 107. This 75 is well below the current price of the that just gives it a lot of intrinsic value. That means that that option is worth a lot of money right now. If you were to exercise that call option, that means you get to buy Walmart for $75 a share and then you can turn around and sell it for 107. So, it has value built in. But remember, when you buy a call option, you have to pay the going the going rate. Okay? So, that's the that's the setup. So, when you find a stock that you're bullish on, you have to be bullish and instead of buying a 100 shares of stock, you can choose a 90 delta call option far out in the future. and then you can buy that option contract. Now, a couple things you want to do. You want to know what your break even is, where the stock needs to go to in order to just break even on the trade. It's very important. And so, and you also want to figure out, you know, how much money you can make on the upside and how much money you can lose on the downside and what your percentage returns are going to be. So, I'm going to show you the Excel calculator that I use, but let me go in and show you the Okay, this is the page that I wanted to show you. This is my Charles Schwab page. Now, on September 2nd, 2026, this is what I did. I bought to open the Walmart December 15, 2028, 75 strike call, $40.50 per contract. So, that was an outlay of $4,50. At the same time after that trade went through then I sold the Walmart November 2026. So roughly you know just couple months from now uh I sold a 125 strike call an out ofthe money call option for 73 cents per contract. So I brought in $73 into my account. I paid out $4,50 and I brought in $73 for this shortdated 125 call. So if you go back to the chart here, Walmart's at 107. I bought the 75 strike call has all this in intrinsic value built up and I saw the 125 strike call all the way up here. Now in order to figure out let's go back to the Charles Schwab here. So I paid 4050 for it and the the strike price is 70 75. So in order to figure out what your break even is, you add 75 to 4050 and that gives you the break even level. So 75 + 4050 is $115.50. All I needed Walmart to do was go up to $11,550 per share in order to just break even on this trade. So if we go back to the chart here, Walmart's at 107 right now. Here's 115 and a half right around here. Okay, Walmart's already been there before. It's already been up to $135. So, in the next two and a quarter years, all I need Walmart to do is go up to $115.50 just to break even on the trade. I have a feeling in the next two and a quarter years, Walmart is going to be above $115.50 per share. Giving myself a lot of time to be right. Only laid out $4,50. took in $73 by selling that shortdated out of the money call option which has a strike price up here. So, as long as Walmart doesn't get above $125 by November 20th or whatever that expiration date is, that option will expire. Then I can sell another shortdated call option uh to bring in even more cash and just kind of run that what's called the poor man's covered call here. But if Walmart does get above 125 by the November expiration, I'll either decide to just sell my shares at at 125. Remember, my break even's 115 and a half. If I sell it at 125, I'm I'm making almost $1,000 in a very short period of time. If Walmart doesn't get up to 125, then I'll sell another call option against it, bring in more cash. it just keeps reducing my cost basis of that $4,50 that I that I spent. Okay, so there's the parameters. I'm buying Walmart because I'm bullish long-term. I'm buying a deep in the money call option, which is going to cost me over $6,600 less than buying a 100 shares of stock. It's a 90 delta. So, as the stock rises, the option price is going to rise as well. And as the stock goes higher, the delta is going to get even bigger. So, I have a 90 delta. Now, if the stock goes up, the delta is going to get up to 91, 92, 93, 94, whatever. Now, let's talk about the downside here. What happens on the downside? Well, sure, the stock can go down. Absolutely, it can go down, and I can lose money on this trade, but my maximum loss can never be more than the $4,50 that I put into the trade. Anyone that bought bought a 100 shares of Walmart at 107 has over almost $11,000 at risk. So, I have a lot less money at risk on the downside. And let me bring up the Excel calculator here. I want to show you the numbers here. So, this is an Excel calculator that I have. And by the way, uh, if you want to see how I did this, uh, by using by piggybacking off of Warren Buffett, down in the description below, I put a link for the Warren Buffett, uh, report that I wrote as well as getting this Excel spreadsheet. Okay, [snorts] so let's take a look at the numbers here. What you do is um, you put in the current price of the stock, you put in your strike price, what you paid for that, and the expiration date. And what the what the numbers will show you here is how much money uh buying a 100 shares of stock would cost, how much the option would cost, what you have at risk here. And down here is a little matrix that tells you how much money you can make or lose, what your returns are going to be versus if you had just bought shares of the stock. Okay? And these numbers you can just fill in which will coincide with these numbers here. So let's go over worst case scenario here. Worst case scenario is that I can lose my $4,000 on the downside. Okay? If Walmart goes down to $0 per share, anyone who bought a 100 shares of stock is going to lose $10,700. I'm going to lose my $4,000. It's 100% loss for both the call option and the stock. And at various prices below where Walmart is right now, you can see the amount of money I can lose versus how much the stockholders will lose and the percentage returns. Now, the the kicker here is on the upside. And you can see as the prices go higher, the dollar amounts are are almost the same. You know, if Walmart gets up to $240 a share in the next two and a quarter years, uh the call option will make $12,450 and the and the stock will make $13,300. Yes, the stock will make a little more, but the percentage here is what is really good. You make 124% on the stock, the option is going to make over $37% return. Okay, that's more than double uh the upside percentage returns. and the and the returns on the upside are so much higher because you're only putting up you're putting up a lot less money to get into the trade. So if you look at it from a riskreward standpoint, yes, on the downside, you can lose money, but if the stock really goes down, you're going to lose less money than shareholders. On the upside, you're going to make almost as much money dollar-wise, but your percentage returns are going to be a lot better. And you can change all these numbers in here. you change the numbers in here and these numbers will change. So once again, if you want to, you know, take a look at this spreadsheet and the the Warren Buffett PDF I wrote, which is all about this deep in the money call strategy, down in the description, I've got links for that. Okay, so this is pretty much what I wanted to show you, why I'm personally bullish on Walmart, why I buy deep in the money longdated call options instead of buying a 100 shares of stock. People will say, "Well, what about dividends and and what happens at when when the expiration date comes?" Well, as a as a call option buyer, you don't get the dividends if the company even pays the dividends. But in my opinion, using this strategy is is the benefits outweigh, you know, getting dividends that the company might pay. And the other thing is that once the expiration date comes around in two and a quarter years from now, I'll have a decision to make. Do I want to continue on with the trade? Do I want to exercise the shares? Do I just want to sell the call option if it has value? That's something that I'll decide in the future. But in the PDF that I wrote about the Warren Buffett trade, I talk more in depth about all that. So, you can take a look down there. All right, that's all for this strategy. I hope this has been helpful to you. I'm personally long Walmart. Not telling you to do it yourself, but this is the way that I decide to get into a bullish trade. Buying deep in the money longdated call options instead of buying shares of stock. All right, that's all for me today. This is Lee Lol. I'll see you in the next one.