Best Buy has short squeeze potential to keep its post-earnings rally going
Best Buy Co (NYSE:BBY) stock is scaling the New York Stock Exchange (NYSE) today, last seen up 14% to trade at $73.57, after the company reported better-than-expected first-quarter earnings and revenue. Strong gaming, computer and cellphone demand boosted results as the electronic retailer prepares for a new CEO to take over later this year.
A short squeeze could be fueling some of today's gains, considering BBY's moderately elevated short interest of 9%. It would take nearly five days for short sellers to buy back the 18.53 million shares sold short.
BBY has been following an uptrend since drawing the line at the $56 floor two weeks ago, and is now trading well above its 120-day moving average for the first time in five months. Today's move has the stock pacing for its eighth straight daily win, while shares sit just below its year-to-date breakeven level. Plus, the stock's 14-Day Relative Strength Index (RSI) was last spotted near "overbought" territory.
Best Buy could also be an attractive premium-selling candidate per Schaeffer's Volatility Scorecard (SVS) of 5 out of 100. In other words, shares have consistently realized lower volatility than options traders have priced in over the past 12 months.