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
- TRiCK O FReaK... | ZeroHedge
- Oil Breaks Below $80 | Financial Sense
- Despite Surprise Rate-Hike, Russian Ruble Crashes Most In 6 Years | ZeroHedge
- Chicago PMI Smashes Expectations, Jumps To 12-Month High | ZeroHedge
- The “Save Our Swiss Gold” Initiative Is Incompatible With the EUR/CHF Peg | Financial Sense
- STTG Market Recap October 30, 2014 | FundMyMutualFund
- How Well Does the CPI Measure Individuals’ Health Care Burden? | Financial Sense
The most relevant financial news and articles from the Internets
- This App Predicts When You're Going To Die | Business Insider
- Notable... | StreetInsider.com
- Meet Our New West Coast Bureau Chief, Matt Rosoff | Business Insider
- CHART OF THE DAY: Starbucks' Mobile App Is Going... | Business Insider
- Here's How 43 Advanced, Emerging, and Developing Countries Rated Their Happiness... | Business Insider
- 10 Things In Tech You Need To Know Today (GOOG, AAPL, YHOO, GPRO, LNKD,... | Business Insider
- Kobane clashes kill 100 IS jihadists in three days:... | Business Insider