Best Buy options remain highly bullish
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of 12,000 May 26 calls for $1.13 and the sale of 9,700 May 25 calls for $1.49. Volume was below open interest in the 25s, so it appears they closed a winning position and rolled it higher in hope of further gains.
They received a credit of $89,300 in the process and remain exposed to more upside if the electronics retailer continues to rally. They kept roughly an equal delta as the old position, which will keep the performance about the same despite taking profits. (See our Education section for more on how to manage trade with options.)
"These guys finally get it," optionMONSTER co-founder Pete Najarian told me in a call today. He turned bullish on the stock during an appearance on CNBC's "Halftime Report" about two weeks ago because the company is "attacking on the Internet, matching prices, and closing failing stores to become more efficient and profitable."
BBY is down fractionally at $25.36 in afternoon trading but has more than doubled this year. It's been ripping higher against heavy short interest, making it the top performer in the S&P 500 in 2013, and the option action has been off the charts.
Pete's brother, Jon Najarian, flagged the activity back on March 18 on our premium chat room as a trader rolled 5,000 April 21 calls into 13,000 of the April 23s. Those 23s have appreciated about 300 percent since the alert.
The next earnings release is on May 21, after today's contracts expire. So it looks like they're betting on pure momentum to keep the stock moving.
Total option volume is almost quadruple the daily average so far today, according to the Heat Seeker. Calls dominate the action, accounting for more than two-thirds of the turnover.