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Friday, December 9, 2022


Best Buy Bulls Bulk Up On Weekly Calls As Stock Hits Highest Since July ’11

Today’s tickers: BBY, GMCR & EBAY

BBY – Best Buy, Inc. – Shares in Best Buy are soaring on Monday, up as much as 7.7% during morning trading to hit $29.44, the highest level since July of 2011, after the stock was resumed at ‘Outperform’ with an increased target price of $40.00 from $32.00 at Credit Suisse today. Trading traffic in weekly options on the consumer electronics retailer suggest some strategists are positioning for shares in the name to extend gains during the shortened U.S. trading week. The most actively traded weekly contracts by volume this morning are the Jul 05 ’13 $29 strike calls, with upwards of 1,300 lots in play versus open interest of 75 contracts. Bullish traders appear to have purchased most of the contracts for an average premium of $0.37 apiece and may profit at expiration should Best Buy’s shares exceed the average breakeven price of $29.37. Upside calls at the Jul 19 ’13 $30 strike are also active today, with around 630 lots purchased during morning trading at an average premium of $0.54 each. The contracts make money if shares in Best Buy rise another 3.7% to top $30.54 during the next few weeks to expiration. Shares in BBY are up more than 140% since the start of 2013.

GMCR – Green Mountain Coffee Roasters, Inc. – A sizable trade in January 2014 expiry put options on Green Mountain Coffee Roasters initiated within the first 40 minutes of the opening bell this morning suggests one trader may be bracing for a pullback in shares of the coffee producer, with the stock up more than 250% since this time last year. Shares in GMCR today are up 3.3% at $77.72 as of 12:25 p.m. in New York. It looks like one trader purchased 5,000 puts at the Jan 2014 $60 striking price for a premium of $5.35 per contract. The position starts making money in the event that shares in Green Mountain plunge 30% from the current price of $77.72 to breach the effective breakeven point on the downside at $54.65 by expiration next year.

EBAY – eBay, Inc. – Trading in weekly options on online auctioneer, eBay, Inc., today indicates some traders are positioning for the stock to rise during the next few sessions. Shares in EBAY are up 2.65% at $53.09 as of 12:10 p.m. ET amid strong gains in U.S. stocks to start the week. The Jul 05 ’13 $52.5 and $53 strike calls attracted the most volume among the weekly contracts during the first half of the session. One or more options traders appear have purchased roughly 1,000 in-the-money calls at the $52.5 strike for an average premium of $0.56 apiece, while roughly 1,100 in-the-money calls were snapped up at the higher $53 strike at an average premium of $0.43 each. In-the-money call buyer stand ready to profit at expiration this week should shares in EBAY settle above average breakeven points at $53.06 and $53.43, respectively. The Jul 05 ’13 $53.5 strike calls are also active, with some 760 lots traded versus open interest of 255 contracts. It looks like most of the calls were purchased for an average premium of $0.13 each, thus positioning buyers of the contracts to profit should the price of the underlying rise another 1.0% to exceed $53.63 at expiration. EBAY is scheduled to report second-quarter earnings after the closing bell on July 17th.


Caitlin Duffy
Equity Options Analyst

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