Market News

October 11, 2012  Thu 9:48 AM CT

An odd four-way trade dominates today's option activity in Best Buy.

BBY is up fractionally on the day at $17.90. The electronics retailer was down at support around $17 and not far from its multi-year low of $16.25 set in mid-August. Shares have been trending lower for months since trading up to $28 in March.

A four-way combination trade makes up almost all of the volume in BBY. It appears that a trader is rolling a short strangle position out in time as expiration approaches at the end of next week.

A trader bought 5,000 each of the October 19 calls and October 17 puts for $0.17 and $0.12 respectively. In the following seconds, he or she sold 5,000 of the November 19 calls for $0.84 and the same number of November 16 puts for $0.35. The volume was above open interest only at the November 16 put strike.

The trader seems to be taking profits in the October short strangle and rolling the position out to November while widening the spread a bit. The position can profit with BBY between $20.19 and $14.81 at expiration on Nov. 16. (See our Education section)
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