Best Buy bulls bet on strong earnings
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,000 September 31.50 calls for $1.65 and the sale of 3,000 September 36.50 calls for $0.25 today. Equal-sized blocks traded in the September 30 calls, sold for $2.45, and the September 35s, which were bought for $0.45, but volume was below open interest in those.
It appears the investor rolled a bullish call spread, which originally involved buying the September 30s and selling the September 35s. Adjusting up to the higher strikes recovered $0.60 of premium and will hand them another $5 if the electronics retailer closes at $36.50 or higher on expiration. (See our Education section)
BBY is up 0.29 percent to $31.22 in afternoon trading. The stock last traded above $36 in mid-January before spiraling into the low-$20s on weak holiday sales. It's been rebounding since, with earnings beating expectations in the two most recent quarters.
Attention now focuses on the next report before the opening bell Tuesday. Today's trader is apparently targeting a rally back to BBY's levels before this year's big selloff.
Total option volume in Best Buy is almost twice average amounts, with overall calls outnumbering puts by almost 6 to 1.