Bullish – BBY – $101.95
Markets ended the week slightly positive but pared gains from all-time highs on Thursday. Momentum has waned with stimulus talks continuing to drag, despite vaccine distribution and Modena’s approval. With the Fed committing to keeping rates low for the foreseeable future until “substantial” economy recovery is in place, markets remain in a status quo. As corporate profits start to catch up with rising equity markets, employment gains are decelerating and retail sales notch back to back monthly declines. With the thinner holiday markets next week, we suggest reducing portfolio exposure over the next couple of week.
BBY Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang reviewed Best Buy’s recent 15% decline since the last earnings report. With retail sales decelerating but still 4% above same time last year and consumer electronics at strong 30% above last year, Best Buy may be oversold and near a buy opportunity. Since BBY has broken below its $105 support level with extremely poor relative strength, Tony is suggested selling a Jan 22 $102/$95 Put Vertical @ $2.76 Credit to reduce downside exposure.
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