Markets

Why Best Buy traders are bullish

(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)

Best Buy has produced some winning trades, and now the bulls are back.

optionMONSTER's tracking programs detected the purchase of 5,300 Weekly 37.50 calls expiring on Oct. 30, most of which priced for $0.61. Volume dwarfed previous open interest of 19 contracts, which means new money was put to work.

Long calls lock in the price where investors can buy a stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis. (See our Education section)

On Aug. 31 , for instance, subscribers to our premium InsideOptions Pro service were alerted to unusual activity in the September 36 contracts. They more than doubled in the following week as the electronics retailer, consolidating after a good quarterly report at the time, continued higher.

BBY ended yesterday's session up 1.27 percent to $35.97 and is up 19 percent since the broader market bottomed on Aug. 24. It's also trying to hold support around its 200-day moving average.

Total option volume was twice average amounts in the session, with calls outnumbering puts by a bullish 7-to-1 ratio.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BBY

Other Topics

Options

Latest Markets Videos