Learn the trade here. Make it on tradeMONSTER

Options Trading News

February 15, 2013  Fri 2:14 AM CT

BBY: SEE CHART GET CHAIN FIND STRATEGIES
A large downside position led yesterday's option volume in Best Buy even as shares rallied.

optionMONSTER's Depth Charge system shows that a trader bought 10,000 September 12 puts for the ask price of $1 in volume that was 3 times the previous open interest in the strike, clearly indicating a new position. Seconds later, he or she sold 10,000 June 12 puts for $0.72 against open interest of more than 24,000.

This could be one of two types of trades, both looking for the stock to drop. It could be a roll, with the trader selling to close the long puts in June and opening a position in September for $0.28 to get an additional three months for the strategy to work.

The second possibility is that the trader is opening a new calendar spread for $0.28, which would be the maximum risk up to the first expiration. The maximum gain would come with BBY right around $12 at the time of that expiration in mid-June. (See our Education section)

BBY rose 3.9 percent to $15.71 yesterday after trading below $14 in the previous session. The struggling electronics retailer had been stuck around $12 from the end of November until the middle of January.
Share this article with your friends


Related Stories

BBY

Best Buy draws bearish position

July 22, 2014

The electronics retailer has recovered half the losses from its plunge in January, but yesterday one large trader was positioning for a pullback.

BBY

Investor bets Best Buy will fill gap

July 7, 2014

The electronics retailer is attempting to fill a bearish gap from early this year, which could make some chart watchers think that shares will keep rising.

Premium Services

Free Webinars

Education & Strategy

Why traders hedge with sector ETFs

Many people who are not familiar with options think that they increase risk, but their first and primary purpose is...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER