Retail Stock Scaling Nasdaq After Beat-and-Raise

BBBY is up over 200% year-over-year now

Assistant Editor
Jun 30, 2021 at 9:56 AM
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Bed Bath & Beyond Inc. (NASDAQ:BBBY) took a trip to the earnings confessional this morning, and came out near the top of the Nasdaq. The housewares retailer reported adjusted fiscal fourth-quarter earnings of 40 cents per share, toppling the estimated profit of 31 cents per share. Revenue also came in higher than expected. The company also raised its full-year revenue outlook as the key back-to-school season quickly approaches. 

Out of the gate, the retail stock is bucking its trend of negative post-earnings moves, last seen up 12.9% to trade at $33.58. The equity now boasts a roughly 200% year-over-year lead, staging an effective bounce from its 50-day moving average.

A short squeeze is adding fuel to the stock's fire. Short interest fell 38% in the most recent reporting period, yet the 20.44 million shares sold short still accounts for nearly 20% of the shares' total available float.

An unwinding of pessimism from options traders could send BBBY higher. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.28 stands in the 93rd percentile of its annual range, meaning short-term options traders have been more put-biased than normal. What's more, BBY's front-month gamma-weighted SOIR sits at a top-heavy 1.10, meaning near-the-money puts outweigh calls among options expiring in the standard July series.

Today, options traders are coming out of the woodwork. In just the first hour of trading, 47,000 calls have changed hands, volume that's eight times the average intraday amount and more than double the number of puts traded. The weekly 7/2 35-strike call is the most popular, with new positions being opened.

Now certainly looks like a good time to weigh in on Bed Bath & Beyond stock's next move with options. The security is seeing attractively priced premiums at the moment, per its Schaeffer's Volatility Index (SVI) of 113%, which sits in just the 22nd percentile of its annual range.

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