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This column was originally published on RealMoney on Oct. 5 at 3:01 p.m. EDT. It's being republished as a bonus for readers.

News that


(WMT) - Get Walmart Inc. Report

will accelerate its rollout of low-cost generic drugs is whacking shares of





(CVS) - Get CVS Health Corporation Report

, both of which are down 5% today. This leaves people like me, who thought the selloff two weeks ago following Wal-Mart's announcement of its drug initiative represented a buying opportunity in Walgreen and CVS, in an embarrassing stupor.

Well, the bull put spread in Walgreen I described in

this video

and established for the

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model portfolio has been stopped out and put to bed for an 80 cent loss; not too bad for being totally wrong and having a position that offered $1.50 maximum profit if the stock merely stabilized. But alas, I was wrong and maybe should have looked at these as "

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broken stocks" and just considered selling calls.

Maybe I'm still a little groggy, but I still believe this selling is an overreaction and represents a buying opportunity in Walgreen and CVS. Again, despite the acceleration of Wal-Mart's rollout, it is still confined to a limited number of locations and only covers a limited number of drugs. And although WAG and CVS get some 65% of top-line revenues from prescription drugs, fatter margins and some 50% of profits come from over-the-counter or front-end sales.

Also, as Wal-Mart finds increasing resistance to entering urban areas, the premise of using lower-priced generics to drive store traffic really shouldn't pose too great a threat to CVS, Walgreen or even


(RAD) - Get Rite Aid Corporation Report

, which rely on their convenience to consumers for shopping for day-to-day staples without taking a long drive or negotiating a 50,000-square-foot big box.

This time, instead of selling a put spread, I'm going with a variation of the calendar spread strategy described in this morning's

opening post . The position I'm eyeballing in Walgreen: Sell the October $45 calls and buy the January $47.50 calls for a net debit of just 50 cents. The fact that I'm looking to sell a call with a lower strike should raise some red flags, but this position actually starts as delta neutral and would become more bullish as time moves forward. The danger is if WAG shares rebound above $47 in the next two weeks.

My rationale for assuming this short-term risk is that this stock is now indeed a bit broken and will need some time to repair itself, so the gains in the share price will be limited over the near-term. This will allow the position to benefit from the accelerated time decay of October options. It also allows flexibility to make adjustments, whether that be rolling up and selling a higher strike or, once October expires, selling some November calls to further reduce the risk/cost of the position.

Let's call this "take two" of my attempt at being bullish on Walgreen. Just don't call me too early in the morning.

Steven Smith writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback;

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