Walmart has seen steady growth, with its stock up 14% in 2025. In contrast, Target’s stock has dropped by 30%. Walmart is expected to report a 4% sales increase to $177.14 billion for Q3, along with a 5% rise in earnings per share (EPS) to $0.61. Target, on the other hand, is projected to see a 1% sales decline to $25.36 billion and a 5% drop in EPS to $1.76. Recently, Walmart has successfully expanded into e-commerce and high-margin sectors, generating over $100 billion in digital sales annually. This has led to more than 100% growth over the past five years. Target has struggled with slower sales growth and has been less adaptable to consumer spending changes, resulting in a 45% stock decline during the same time. Target’s stock is priced lower compared to both the S&P 500 and the Zacks Retail and Wholesale sectors. Walmart’s stock trades at a premium due to its EPS growth. Both companies’ stocks are priced at less than 2X their expected sales. As dividend kings, both Walmart and Target have increased their payouts for 50 years. Walmart’s steady growth makes it appealing for long-term investors, while Target offers a higher dividend yield of 5.07%, compared to Walmart’s 0.92%. Just days before earnings reports, there is a clear divide between Walmart and Target. As of November 18, 2025, Walmart’s stock has risen 14% this year, while Target has seen a sharp 30% decline. This situation creates a classic opportunity for options traders looking to capitalize on either momentum or a reversal. Target, which will report tomorrow, has low expectations with sales and earnings forecasted to decline. The company has often missed earnings estimates, which might entice traders to buy put options, anticipating another disappointment. Recent government data revealed that retail sales growth slowed to just 0.2% last month, indicating that consumers are cutting back on discretionary spending, which is crucial for Target. However, since Target’s stock has already dropped significantly, much of the bad news may be included in the price. This could lead to a sharp rally if any positive surprises occur. The implied volatility on Target’s options is currently high, suggesting a potential stock move of over 8% in either direction. This makes a straddle—a strategy of buying both a call and put option—a good choice for those expecting a big move but uncertain about the direction. Walmart reports on Thursday, and its situation is quite different. The stock is valued high due to its strong performance. It is priced for perfection, meaning that even a solid report that meets expectations might lead to a sell-off. In its Q2 2025 report, for instance, the stock fell nearly 5% despite beating revenue forecasts because EPS missed by a few cents. With Walmart’s high valuation, buying protective puts or using a bear call spread may be wise as earnings approach. Recent consumer sentiment reports show improvement, reaching 78.8, but shoppers are still focused on value, benefiting Walmart’s grocery-heavy model. Any signs of slower e-commerce growth or weaker forecasts could hurt the stock’s high valuation. For anyone betting on these stocks, keep in mind that implied volatility often drops sharply after earnings releases, which can decrease the value of options. This “IV crush” means it’s essential to accurately predict both the direction and magnitude of the stock’s movement. Selling premium through strategies like credit spreads could be a better choice for those who believe the market is overestimating the potential volatility after earnings.

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