Best Buy faces downside position
Chris McKhann | [email protected]
optionMONSTER's Depth Charge system shows that a trader bought 5,000 December 40 puts for the ask price of $0.88 and sold 10,000 December 23 puts for $0.14. Volume was far above the previous open interest at each strike, indicating that this is new positioning.
The trade, known as a ratio spread because twice as many contracts were sold than bought, cost $0.60 to open, which is the maximum amount at risk if BBY remains above $30. The maximum gain would come with the stock down at $23 at expiration in mid-December. (See our Education section)
BBY gained 0.51 percent to $37.14 yesterday after peaking at $37.98 earlier in the session. These are the electronics retailer's highest levels since 2010. Shares have climbed from a low of $11.20 at the very end of 2012.
More than 36,000 BBY options traded in total yesterday, compared to a daily average of 16,000.