Unusual Options Activity In Best Buy $BBY

| December 2, 2015 | 0 Comments

BBY OptionsUnusual Options Activity In Best Buy $BBY 

As many of you know, unusual options activity can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.

This is something professional options traders pay a lot of attention to, and for good reason…  Unusual options activity can “tip off” big moves in a stock, either up or down.

So let’s take a look at some ‘interesting’ activity that caught our eye this week…

Best Buy $BBY is the sole remaining large scale, brick and mortar electronics retailer in the US.  The company is worth about $11 billion and generates over $40 billion in sales each year.  For a good description of the company, follow the link.

$BBY is trading at $31.24, down 16% for the year.  That’s 24% below the 52-week high and 11% above the 52-week low.

So what does unusual options activity in BBY tell us?

It’s the time of the year again where investors are going to be heavily focused on retail sales.  Consumer spending is nowhere more apparent than at retail (online and physical) stores heading into the holidays.

As the last remaining big store electronics chain, BBY does have an advantage over non-specialized stores.  Still, many shoppers prefer to save money and effort by purchasing online.  An online giant like Amazon $AMZN still has an edge over an electronics specialist like BBY which has a hard time competing on price.

Here’s the deal…

This week, a large amount of puts traded in BBY options.  Keep in mind, a put option makes money when the underlying stock goes down before its expiration date.

To be more specific, traders bought over 6,000 31 strike puts expiring on December 11th.  The average price paid for each contract was about $0.70. And, open interest shows this is clearly opening action.

Here’s the chart of $BBY:

unusual option activity, a chart of BBY

As you can see, BBY has taken a sharp downturn in recent days.  The share price has fallen well below the 50-day moving average and is nearing the lows of the year.

The put buying suggests not only is there no upside to look forward to now that December is here, but also there could be even more downside in the coming days.  This could be a bet that investors will punish large brick and mortar retailers with Black Friday sales way down compared to last year.

More Options Trading Ideas…

Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.

We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!

Yours in Profit,

Gordon Lewis

Note:  Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com.  You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.

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Category: Unusual Options Trading Activity

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.