Best Buy Options Surge Higher

Best Buy Co., Inc. (BBY) shares may have dropped Monday, but options painted a more bullish picture. Some 12,305 call options traded hands, which is more than 3x the average daily volume of 4,000 contracts. The majority of the action was seen on the September $47.50 call options, which are trading at $0.70 per conract. The move means at least some traders are betting on a 9% move higher during the next half of a month until the September expiration.

Electronics retailers like Best Buy have struggled in recent months amid a slowdown in U.S. consumer spending. Shares in the retailer have fallen more than 7% since the beginning of 2008, but began to recover ground last quarter when it beat expectations. Best Buy also announced a long-term plan to double sales between now and 2013. The company also has plans to open up its second flagship store in China wwhile launching also launching airport gadget vending machines.

Investors are also beginning to see the light at the end of the tunnel. Bank of America Securities analysts upgraded the stock last month, saying market share gains will offset weak sales throughout the industry. David Strasser, who covers the company, raised his rating on Best Buy from “Neutral” to “Buy” while increasing his price target from $41 to $46 per share. The analyst noted that the retailer gained market share in several key markets, including flat panel TVs, videogames, and notebooks during the second quarter.

Best Buy is a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. The company operates retail stores and web sites under grand names Best Buy, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, Pacific Sales Kitchen and Bath, and Speakeasy. It operates both domestically in the United States and internationally in Canada and China.

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