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Best Buy Sees Upside Options Activity

Best Buy has been falling steadily for the last two months but saw some upside option activity yesterday.

OptionMonster's real-time tracking systemsshow that a buyer stepped in to pick up the February 36 calls for $0.37 and $0.42, followed by a few large blocks bought for $0.40. The 5,137 calls traded were more than double the open interest of 2,241 contracts and nearly 10 times the average daily volume at the strike.

The big-box electronics chain closed yesterday up 0.71 percent to $35.65. The stock hit its 52-week high at $45.55 in mid-December but then immediately dropped off a cliff as it broke below the 50- and 200-day moving averages.

The charts are definitely not pretty, but the volatility is low. For the calls bought yesterday to turn a profit, the shares would need to gain roughly 2 percent by expiration next Friday.

Analysts apparently believe that the tide is ready to turn, as Best Buy was upgraded to "buy" at Janney Montgomery Scott last week and Rochdale Securities in late January. As traffic and sales are beginning to improve, the valuation is reaching more attractive levels.

The company is scheduled to report its next earnings report on March 25.

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BBY Competes With:

Amazon.com

Apple

Wal-Mart Stores

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Options Trading School:

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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Disclaimer

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