Short-Term Bulls Descend On Best Buy Co Inc (BBY)

Best Buy Co Inc's technical struggles aren't keeping bullish traders away

Digital Content Group

Oct 16, 2014 at 11:02 AM

Best Buy Co Inc (NYSE:BBY) is up slightly this morning at $30.95, but its year-to-date deficit is still more than 22%. Nevertheless, calls are trading at a 57% mark-up to the average intraday rate, and short-term strikes are in demand, per the stock's 30-day at-the-money implied volatility (IV) -- up 9.9% to 46.8%.

Digging deeper, BBY's most active option by far is the weekly 11/14 32-strike call, where more than 2,500 contracts are on the tape. Almost all have crossed at the ask price, IV has jumped 5.9 percentage points, and volume outstrips open interest of just one contract, collectively pointing to buy-to-open activity.

By purchasing the calls, today's traders anticipate BBY will topple $32 by the close on Friday, Nov. 11, when the weekly series expires. In order to do so, the stock will have to hurdle a potential layer of resistance at its 80-day moving average, which is just overhead at $31.35.

As alluded to, Best Buy Co Inc (NYSE:BBY) has struggled on the charts. Nevertheless, 13 out of 19 covering analysts have doled out "buy" or better recommendations on the equity. In other words, the stock could be vulnerable to potential downgrades.

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