Best Buy (BBY) Covered Call Play
Shares of Best Buy (BBY) are looking ripe for a covered call play.
Over the past 12 months, Best Buy (BBY) shares have traded between $22.74 and its 52-week high of $45.63. BBY shares are now trading with a P/E Ratio of 8.2 and EPS of 2.96.
So what's the move?
Mastery Sponsors - Become one Today
Shares of Best Buy are trading just $2.50 from their 52 week low, thanks to their recent earnings report where the company reported a 30% drop in profits.
Mastery Bottom Line:
Although Best Buy reported a 30% drop in profits, the retailer just posted its third consequetive quarter of positive same store sales, all during a time of slowed consumer investment in home improvements.
It's hard to imagine Best Buy dropping any lower than it's 52 week low here. We recommend buying the stock and selling covered calls - the December $28 strike is trading at $1.05 right now.
For example, if you were to buy 500 shares at the current price of $25.25, you could then sell 5 contracts and take in $525 for the options premium. If the share price surpasses $28 and you get called, you'll make a total profit of $1,915, a 15% gain in 3 months.
Although selling covered calls is considered a conservative strategy, please make sure you do your research and understand the concepts before diving in.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- "Let's Take Them On!": Libor E-mails Of Christian Bittar Revealed | ZeroHedge
- Potential Runners | iBankCoin.com
- Crude Drops After US Rig Count Decline Extends To Record 20 Weeks | ZeroHedge
- Inside The Fed's "Doomsday" Bunker | ZeroHedge
- Cybersecurity Companies in the "Military-Internet Complex" | Financial Sense
- A Few Words of Cogent Advice For You on this Lovely Morning | iBankCoin.com
- America's Drone-Death Outrage (Summarized In 1 Awkward Cartoon) | ZeroHedge
The most relevant financial news and articles from the Internets
- The Apple Watch is already wiping the floor with the entire smartwatch... | Business Insider
- UNBOXED: The Apple Watch | Business Insider
- For tech entrepreneurs, hustle is... | Business Insider
- Streetinsider.com's Hot... | StreetInsider.com
- Lorient lifeline after crazy night in Marseille | Business Insider
- These 5 slides show where most of the VC money went in the last 3 months | Business Insider
- Record crowds as Australia and New Zealand mark Anzac Day... | Business Insider