U.S. Markets closed

Trade bets on comeback in Bed Bath

David Russell (david.russell@optionmonster.com)

One investor apparently thinks that Bed Bath & Beyond will regain lost ground this year.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,850 January 57.50 calls for $7.05 and the sale of an equal number of January 77.50 calls for $0.85. Volume was more than 11 times the previous open interest at each strike, indicating new activity.

The trade cost $6.20 and will earn a maximum profit of 223 percent if the home-goods retailer closes at $77.50 or higher on expiration. That's less than $2 below its all-time high from last June. (See our Education section for more on the strategy, which is known as a bullish call spread because it leverages a move between two prices.)

BBBY rose 1.34 percent to $59.78 on Friday. It more than tripled in value between early 2009 and mid-2012 but has been pulling back since then as the company's financial performance weakened. Based on the bullish options trade, the investor seems to be betting that it will retrace that decline in the next 12 months.

Overall option volume was 7 times greater than average in the session, according to the Heat Seeker. Calls accounted for more than 85 percent of the total.

More From optionMONSTER