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Complex call spread targets Best Buy

Chris McKhann (chris.mckhann@optionmonster.com)

Shares of Best Buy remain range-bound, and a complex trade sees the possibility of a small break higher.

BBY is off 0.56 percent to $25.06 today. The electronics retailer is holding yesterday's impressive gains but remains in the range between $24 and $26 that has been in place for all of this year.

More than 14,000 BBY options have traded already this morning, about 3 times its daily average. Most of this volume is in one spread.

optionMONSTER's Heat Seeker shows that a trader bought more than 3,000 April 26 calls for $0.67 up to $0.71 and, minutes later, sold more than 9,000 April 27 calls for the bid price of $0.46. The total volume at each strike was more than the previous open interest, so it appears to be a new opening ratio spread .

This call spread takes a maximum profit if BBY is trading up around $27 around expiration. But given the 3-to-1 ratio of the options at the two strikes, the trader also takes in a credit on the spread.

This means that he or she will profit if shares remain anywhere below $26. That makes for a huge profit range, but the trader is theoretically short shares above $27. (See our Education section)

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