Options Trading News

April 8, 2013  Mon 12:21 PM CT

Big players think there is still money to be made in Best Buy.

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.
Share this article with your friends

Related Stories


Put buyers hit Best Buy before earnings

May 18, 2016

The electronics chain, which reported bearish results on Feb. 25, is scheduled to announce its next quarterly numbers before the market opens on May 24.


Why traders are buying puts in Best Buy

May 4, 2016

The electronics chain is up 14 percent in the last three months, but traders are positioning for a possible pullback in coming weeks.


Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »