Unusual Options Activity: Bed Bath & Beyond (BBBY)

Shares of retailer Bed Bath & Beyond (BBBY) have traded down over the past year, after shares surged higher following a near-miss with bankruptcy. One trader sees a further rally in shares possible in the coming months.

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  • That’s based on the January 2023 $60 call. With 324 days until expiration, 4,519 contracts traded compared to an open interest of 266, for a 17-fold jump in volume. The buyer of the calls paid $1.18 for the option.

    Shares trade for about $17. For a move to $60, shares would need to rise over 250 percent between now and January. That’s a big move higher, particularly for a stock that has a 52-week high just over $44.

    The company hasn’t quite gotten back to being profitable yet, but shares are down to under 14 times earnings, and the stock is now valued at 0.2 times its price to sales.

    Action to take: Shares tend to have big swings, and coming off a downswing, it’s possible that shares move higher from here. Shares are coming off a 52-week low in the $12 range, still leaving a lot of upside, although the company doesn’t pay a dividend.

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  • For traders, the call option is fairly inexpensive, and could deliver triple-digit gains at any point over the course of the rest of the year. Look for a big swing higher, then take some profits.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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