Best Buy Stock Stumbles After Air Fryer Recall

Puts are being exchanged at double the average intraday amount

Digital Content Manager
Apr 21, 2022 at 12:47 PM
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Best Buy Co Inc (NYSE:BBY) is under scrutiny today after news came out the tech retailer had to recall roughly 635,000 of its Insignia Air Fryers and Air Fryer Ovens. More than 100 reports of these fryers and ovens catching fire, burning, or melting in both the U.S. and Canada resulted Best Buy's recall decision, with at least two users injured, including a child. 

The security is struggling for direction, last seen down 0.5% at $93.99. The equity is still facing a 7.8% year-to-date deficit, however, with pressure emerging at the 40-day moving average. BBY is sports a quiet lead for the month though, and should these gains hold it could snap a five-month losing streak. 

bby april 21

Put traders are targeting BBY at a quicker-than-usual clip today, with intraday volume running double what's typically seen at this point. So far, 4,611 puts have crossed the tape, compared to just 1,535 calls. The most popular is the June 92.50 put, where positions are being bought to open, followed distantly by the 90 put in the same monthly series. 

This bearish sentiment among options traders is nothing new. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.26 puts have been picked up for every call. This ratio sits in the 92nd percentile of its 12-month range, implying a healthier-than-usual appetite for bearish bets of late. 

Echoing this, short-term options traders have been much more put-biased than usual. This is per BBY's Schaeffer's put/call open interest ratio (SOIR) of 1.08, which stands higher than 80% of readings from the past year. 

It's also worth noting that these options can be had at a bargain right now. The stock's Schaeffer's Volatility Index (SVI) of 36% sits in the low 22nd annual percentile, meaning these traders are pricing in relatively low volatility expectations right now. 


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