This Company May want to Change its name to ‘Bed, Bath & Below’: Bed Bath & Beyond Inc Stock (NASDAQ: BBBY)

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  • Bed Bath & Beyond Inc (NASDAQ: BBBY) announced earnings on July 8, missing analyst estimates $0.74 or 60.7%. That’s a substantial miss and as a result, it’s experienced significant negative EPS revisions for 2021 and 2022. Since the report, the 2021 EPS estimates have been revised to a $2.43 loss from a $1.72 loss. That’s a substantial negative revision. Following the earnings report last Wednesday, the stock closed $2.55 lower on Thursday, breaking out of its bullish channel. The selling paused briefly on Friday before resuming on Monday.

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  • The option activity was about average on Monday, but there were some significant trades that were made. For example, 20,000 call contracts were sold on the 17 JUL 20 $9 and $8 call strike prices at the same time. A few minutes later, 12,500 put contracts were traded on the 17 JUL 20 $7.50 and the $7.00 strike prices. The call option contracts were sold at market and the put options were bought on the $7 strike price while the $7.50 were filled between the market.

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  • Action to Take: The combination of call selling and put buying are both bearish strategies. In this case it appears that the activity for the both the $7 and $7.50 strikes were put option purchases. This gives an expectation that the price finish below $7 by the end of the week.

    Speculators may want to consider buying a 21 AUG 20 8/7 long put vertical for around $0.50.