Best Buy Co., Inc. (BBY) Calls Active Ahead of Key Sales Report

Can Best Buy Co Inc (BBY) conquer the round-number $40 region?

by Andrea Kramer

Published on Jan 2, 2015 at 10:54 AM
Updated on Apr 20, 2015 at 5:09 PM

Best Buy Co Inc (NYSE:BBY) will unveil its key holiday sales figures the morning of Thursday, Jan. 15. It looks like some options traders may be gambling on a solid report for the electronics retailer, with early call volume running at five time the average intraday pace.

The stock's 30-day at-the-money implied volatility has jumped 3.1% to 52.8%, reflecting a growing demand for short-term contracts. Indeed, nearly all of the action has transpired at the February 40 call, where roughly 10,900 contracts have changed hands, mostly in one fell swoop. Digging deeper, it looks like one speculator bought the calls to open, to bet on BBY topping $40 -- and possibly making a run into annual-high territory -- by the close on Friday, Feb. 20, when back-month options expire.

That trader is paying a pretty penny to roll the dice on BBY's short-term trajectory, too. The stock's Schaeffer's Volatility Index (SVI) of 61% stands higher than 84% of all other readings from the past year, suggesting BBY's near-term contracts are expensive, on a historical basis.

On the charts, Best Buy Co Inc (NYSE:BBY) spent 2014 clawing its way back from a mid-January bear gap, which sent the shares as far south as the $22 area. Since then, the equity has powered roughly 76% higher to trade at $38.96, and is knocking on the door of positive year-over-year territory.

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