By Pete Najarian, co-founder of OptionMonster
NEW YORK -- Best Buy (BBY) has been struggling for a long time, but option traders apparently think that the tide may be turning.
Cleveland Research commented that channel checks show comparable-sales trends improving in May, driven by appliances and mobile products. The firm also said feedback indicates that the company's morale appears to be moving in the right direction under its new leadership.
That note gave the electronics retailer a boost, and the shares rose 2.63% Tuesday to close at $20.32. It could finally mark a turn for a company that for years has been used widely as a showroom for products that customers buy from online competitors.On Tuesday, the calls lit up as traders looked for Best Buy to keep ramping higher. They purchased he August 23 contracts early for 48 cents to 58 cents, along with the July 21s for 71 cents to 85 cents, according to OptionMonster's tracking systems. Those calls lock in the price that must be paid to buy the stock, so they can generate significant leverage if it runs higher. But if it doesn't, those options will expire worthless. Overall calls in the name outnumbered puts by almost 16,000 to 2,500, reflecting Tuesday's bullish sentiment. Total option volume was more than twice the average amount. Najarian has no positions in BBY.
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