Investor bets Best Buy will fill gap

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One large investor apparently believes that Best Buy will keep running higher, even after a big rally.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 6,000 August 35 calls for $0.42 and the sale of 5,800 July 5,800 calls for $2.25 on Thursday. Volume was below open interest in the nearer-dated contracts, which suggests that an existing position was rolled forward in time to a higher strike.

These long calls lock in the price the electronics retailer can bought, letting investors cheaply position for a rally. Thursday's investor was probably sitting on big profits in the July options and wanted to recover some of his or her capital without relinquishing the name completely. (See our Education section for more on managing trades with options.)

BBY rose 2.10 percent to $32.10 on Thursday and is up 26 percent since the middle of May. The stock has been fighting its way back from a huge drop in January, cutting jobs and shifting business online to offset weak store traffic. There was also heavy upside option activity after its last quarterly report, which resulted in big profits as the stock advanced.

The shares are attempting to fill that bearish gap from early this year, which could make some chart watchers think that the stock will keep rising.

Overall option volume was quadruple the daily average, according to the Heat Seeker. Calls accounted for a bullish 62 percent of the total.

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