BBY’s Blowout
Stock Blasting on Earnings
Dear Bottarelli Research Member,
Good morning. Electronics giant Best Buy (BBY – NYSE) is opening on a high note after reporting earnings of $779 million ($1.86 per share) versus $570 million ($1.38 per share) one year ago. Since analysts were calling for earnings of $1.79 a share, this number is being applauded on Wall Street. At the same time, BBY’s revenue jumped 12% to $16.55 billion (up from $14.72 billion) while same-store sales rose 7%. And just to put a cherry on the sundae, Best Buy forecasted full-year earnings between $3.45 to $3.60 a share, which was significantly higher than Wall Street’s outlook of $3.34 a share. All of this adds up to a strong upside earnings reaction which is exactly what we’re seeing today in Best Buy.
As a result, the combination of BBY April 42 Calls (O:BBY 10D42.00) and BBY April 41 Puts (O:BBY 10P41.00) that we entered for a total price of $2.52 has moved up to around $2.90. But to be honest with you, it looks like these calls are being undervalued by the floor traders. Let’s wait a few minutes so the dust can settle from BBY’s report, and then we’ll try to maximize our returns by selling at the most ideal time.
In the meantime, we’re seeing a nice opening move today in our GMCR April 95 Calls (O:GMCR 10D95.00) and our V April 90 Calls (O:V 10D90.00). Let’s see how the opening moments play out before making our next move.
As always, I’ll follow up throughout the trading session. But until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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