Best Buy Stock Surges on Dividend Hike Announcement

Options bulls are blasting BBY despite a revenue miss

Digital Content Manager
Mar 3, 2022 at 10:19 AM
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Best Buy Co Inc (NYSE:BBY) is up 9.3% to trade at $110.35 this morning, despite the technology retailer posting a fourth-quarter revenue miss and worse-than-expected 2023 forecast, while profits were in line with analysts' estimates. Constrained inventories and staffing challenges were to blame for the lukewarm results. What's boosting the equity instead is a 26% hike in quarterly dividends to 88 cents per share, as well as plans to buy back about $1.5 billion in shares next year. 

The security earlier surged to its highest trading level since November, extending a bounce off its Feb. 24, roughly two-year low of $85.58. The shares yesterday toppled overhead pressure at the 60-day moving average as well, though they remain far off their Nov. 22, all-time high of $141.97. Year-over-year, Best Buy stock is up 8.4%. 

Short sellers have been piling on the equity of late. In fact, short interest rose 31.4% over the most recent reporting period, and the 13.57 million shares sold short make up 6.3% of the stock's available float, or nearly one week's worth of pent-up buying power.

The options pits lean bearish, too. This is per Best Buy stock's Schaeffer's put/call open interest ratio (SOIR) of 1.22, which sits higher than just 94% of readings from the last year. In other words, short-term options traders have rarely been more put -biased.

A sentiment shift could be taking place today, though. So far, 14,000 calls and 8,974 puts have crossed the tape, or 14 times the intraday average. Most popular is the 3/4 110-strike call, followed by the 122-strike call in the same weekly series, with positions being opened at both.

 

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