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Best Buy pops with bullish spread

Chris McKhann (chris.mckhann@optionmonster.com)
Best Buy pops with bullish spread

A bullish three-way trade topped the option activity in Best Buy yesterday as shares hit a two-year high on a Credit Suisse upgrade.

optionMONSTER systems show that a trader bought 8,000 August 30 calls for the ask price of $1.50 and sold 8,000 August 33 calls for the bid price of $0.51. Seconds later, he or she sold 8,000 August 28 puts for $0.95. The volume was above the previous open interest in all three strikes, so this is a new combination spread.

The position is bullish up to the $33 level, and it cost just $0.04 to get that exposure. The risk is that the trader will have to buy shares if they are below $28 before expiration in mid-August because of the short puts . (See our Education section)

BBY jumped 8.82 percent to $29.74 yesterday, its highest close since July 2011, after Credit Suisse raised its price target on the electronics retailer to $40 from $32. Shares were at a low of $11.20 at the end of 2012.

More than 57,700 BBY options changed hands in all during the session, compared to its daily average of 4,846 in the last month.

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