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Best Buy (BBY) Crumbles on Weak Sales, Options Zoom 1,300%

Thursday, January 16th, 2014

1:35pm (EST)

Shares of Best Buy (BBY, $27.20, down $10.37) are down 28% today after the company posted weaker-than-expected holiday sales.

There have been a number of analyst upgrades on the rocket ride from a 52-week low of $13-and change to a 52-week peak north of $44 but they are jumping ship after issue downgrades.

Best Buy said sales were off 0.8% as revenue came in at $9.75 billion and below expectations.  The decline was a result of lower same store sales versus last year as they fell nearly 1%.

So much for the turnaround.

We should have watched the drop below $40 more closely in December as it was a clear sign lower prices were in store but we have been trading call options to start the year and missed the boat.

The January 35 puts (BBY140118C00035000, $7.82, up $7.27) are zooming over 1,300% after closing yesterday at double-nickels (55 cents).  These options expire tomorrow and the traders who went short with these puts are having a monster payday.

The February 35 puts (BBY140222P00035000, $7.90, up $6.60) are soaring over 500%.

We will check the chart to see if there is further weakness ahead but if you are thinking of going long, it’s not wise to catch a falling knife.

As far as the market, the indexes are making a slight back test to support that served as prior resistance and as long as these levels hold into the close, there should be further upside action into next week.

The Dow is down 76 points to 16,405 while the S&P 500 is lower by 4 points to 1?844.  The Nasdaq is up a tick to 4,215.

We have a lot to cover with our current trades so we have to roll.  Subscribers, check the Members Area for the updates.

Market Edges Higher

Tuesday, May 22nd, 2012

1:05pm (EST)

The bulls are working on a 2-session win streak as they look to push the next layer of resistance.  After a solid start the major averages have come off their highs but are still showing solid gains.  While overseas news has been light, we did notice Fitch’s downgrade on Japan’s credit rating which reflected growing risks for Japan’s sovereign debt.  Add another one to the growing list.

As far as economic news here at home, the National Association of Realtors reported Existing Home Sales rose 3.4% in April to 4.62 million versus estimates for an increase to 4.61 million.  On the negative side, the Richmond Fed Manufacturing Index came in at 4 versus expectations for a print of 11.

Major earnings announcements are winding down as we look ahead to July and the next cycle but Best Buy (BBY, $18.54, up $0.37) reported their results today.  The company managed to beat Wall Street’s expectations but there was nothing good about their quarter.  Same-store Sales fell over 5% and revenues were lower in Europe and China. 

Although shares are getting a pop, they did dip below $18 and the 52-week low is at $17.53.  We said there was a chance shares could touch $20 on better-than-expected results but we have a summer-time target of $15 or worse for the stock.

We added 2 new trades this morning as we were able to get in at or below our limit prices.  These trades will be short in nature as we explain in the Members Area but we are still targeting at least 50% gains in two weeks or less for both recommendations.

As we head to press, the Dow is up 49 points to 12,553 while the S&P is showing a gain of 8 points and is at 1,324.  The Nasdaq is advancing 10 points to 2,857.

Market Pulls Back

Wednesday, March 28th, 2012

2:00pm (EST)

Futures were up when the European markets opened for trading this morning and were advancing as we headed towards the opening bell here at home.  However, the early momentum was halted before Wall Street’s gates opened after Durable Goods Orders for February disappointed.   DGO’s rose 2.2% but were well below expectations for a 3.0% pop.  Excluding transportation items, the core reading showed an advance of 1.6% which also missed expectations for an increase of 1.7%.

The bears quickly took notice and pounced on the weaker-than-expected news, driving futures lower.  The bulls held ground for the first hour of trading but the overseas markets worsened which created some additional selling pressure.  Although we have bounced off the lows, somewhat, the Dow is down triple-digits and the S&P has slipped below the 1,400 level.

There are a couple of IPO’s worth mentioning today.  Annie’s (BNNY, $33, up $14), the maker of organic mac-and-cheese with the famous bunny logo, priced 5 million shares at $19 while Vocera Communications (VCEA, $22, up $6) priced roughly 6 million shares at $16.

The giddiness over these names hasn’t helped the overall market as Monday’s rally continues to fizzle.

The Dow is down 102 points to 13,095 while the S&P 500 is off 13 points to 1,399.  The Nasdaq is lower by 28 points to 3,092 and the Russell 2000 is off 10 points to 830.  The Russell will need to hold 830 today or the rest of the week could be nasty.       

Best Buy (BBY, $26.68, down $0.25) is expected to report its quarterly results before the bell on Thursday.  The suit-and-ties are looking for a profit of $2.16 a share on sales of $17.2 billion.  There is a chance for a surprise (which we doubt) or a miss (which is likely) as the range is $2.01 to $2.33 a share on revenue of $16-$17.7 billion.

Although we will stay on the sidelines, the April 24 puts (BBY120421P00024000, $0.45, up $0.10) look like a good gamble on a miss.

We have a lot to cover inside our Members Area as we have a number of Hard Stops in play.  The good news is they are protecting profits so we don’t mind closing winning trades on a day the market is getting hammered. 

Our second Capital One (COF, $56.44, down $0.44) trade made nearly 50% in less than 2 weeks and our other recent Capital One call option trade closed last week and made our subscribers 292% in just one week.  Seriously.

Subscribers, check the Members Area for rhe action.  We will be back in the morning with our next update.

Best Buy (BBY) Misses, IPO’s Market Heats Up

Tuesday, December 13th, 2011

1:40pm (EST)

The bulls are trying to power ahead following Monday’s pullback and got off to a good start despite more shaky comments from across the pond.  Today’s rhetoric comes from German Chancellor, Angela Merkel, who said he was opposed to increasing the size of Europe’s bailout fund.  The current ESM (European Stability Mechanism) has $500 billion euros which isn’t enough to cover Spain and Italy if they were to default.  We have mentioned before if the EU can get this to $1 trillion it would do wonders for the market.

Here at home, Retail Sales were no help as they were up only 0.2% versus estimates for growth of 0.5% for November.  Retail Sales less autos were also up 0.2% compared with forecasts for a 0.4% rise for the month.

Best Buy (BBY, $24.85, down $3.23) is down 12% after disappointing Wall Street with its quarterly numbers.  The company reported a profit of $154 million, or $0.42 a share, versus $217 million, or $0.54 a share, for the year ago period.  Revenue came in at $12 billion, up from $11.9 billion, for the same period.  The suit-and-ties were looking for $0.52 a share on $12.1 billion.

We thought this could be a turnaround quarter for the company but they haven’t done anything exciting and continue to disappoint.  Our chart work from the weekend showed Best Buy nearing resistance and an earnings beat could have gotten shares past $30.  However, with the 10-cent miss, shares appear headed to the low $20’s where it still might not be a “Buy”.  In other words, the company’s Best days could be over until it reinvents itself.

In IPO news (initial public offerings), Jive Software (JIVE, $15.00, up $0.03) priced 13.4 million shares at $12 and is showing a nice pop in its first day of trading.  This is one of the “better” IPO’s coming public this week and, believe it or not, there is already takeover chatter surrounding the company. 

Jive has a unique user platform and could be a good fit for IBM (IBM, $193.43, up $1.25), Microsoft (MSFT, $25.99, up $0.48), Oracle (ORCL, $31.32, flat) and SAP (SAP, $56.78, down $0.51), according to one analyst.

Elsewhere, one brokerage firm, Sterne Agee, couldn’t wait for Zynga (Proposed Ticker: ZNGA) to come public.  The stock will make its debut on Friday, but they decided to jump the gun and initiated coverage of the stock with an “Underperform” rating.  Yikes!

We will keep you updated on some of the other IPO’s coming out this week but we won’t be able to trade options on them until 2012 and they will be expensive.  We aren’t sure if these two IPO’s will make our Watch List, but as you can see, analysts have already penciled in different expectations for the companies going forward.

As we continue to churn through this trading range, we are staying patient until we get the “all clear” sign from the bulls, or the bears.  The upside resistance targets we have outlined or downside support levels we have gone over will come into play soon.

We will be adding some new option trade candidates to our Watch List tonight as we get ready for our next new batch of trades and we will be listing both call and put options.  For those of you just joining us, stay patient as well.

As far as today’s action, the Dow is currently up 77 points to 12,098 while the S&P 500 is higher by a six-pack to 1,242.  The Nasdaq is up a deuce to 2,614.  Subscribers, check the Members Area for the updates.

Best Buy is Not a “Buy”

Tuesday, September 13th, 2011

1:00pm (EST)

Futures were pointing to a lower start this morning amid ongoing concerns about Greece and Italy but started to improve as we headed towards the opening bell.  The market opened flat for the most part and drifted lower, before recovering and turning positive.  Although the major indexes are now mixed, Tech is showing some strength.

Germany, the strongest country in the eurozone, is making its voice heard as they try to calm worries that Greece is heading for a default.  The Germans rejected the notion that a Greek bankruptcy would provide a quick solution, like some have suggested, and say Europe instead needs to stick to its efforts to cut budget deficits and improve its competitiveness.

Meanwhile, Italy confirmed that they are in talks with China to persuade them to buy some of their bonds which was the catalyst for yesterday’s late-day rally. 

Here at home, economic news has been light as well as corporate news although there is one company’s fall from grace we would like to highlight. 

Best Buy (BBY, $23.11, down $1.82) continues to set fresh 52-week lows after kissing $22.74 earlier this morning.  The company posted earnings that were well short of Wall Street’s forecast and shares are down another 7% on weaker sales.

The company earned 47 cents a shares on revenue of $11.35 billion but the suit-and-ties were looking for a profit of 53 cents a share on $11.5 billion.  Best Buy also lowered their full-year guidance target to $3.45 a share, down from $3.55 a share, on sales of $51 billion-$52.5 billion.  We aren’t “buying” it as we think shares will continue to struggle as consumers get thrifty.

We missed a sweet option trade on this one as the Best Buy September 25 puts (BBY110917P00025000, $1.94, up $0.97) have surged 100% today.  Let’s see: stiffer competition, sluggish TV and video game sales, and lack of new products.  Yeah, we missed the boat… 

No worries, we have a trade we are releasing today that could do equally as well, if not better.  In fact, if our price target for this stock, which is currently at $62, is hit, these options will make over 600%!

We said to get your Christmas shopping list ready and we are excited about this trade, folks!

As we head to press, the Dow is down 9 points to 11,051 while the S&P is up by 4 points to 1,166.  The Nasdaq is also trading higher and is back over 2,500 – up 18 points to 2,513.

Subscribers, please check the Members Area for the important trade update and make sure you pay close attention to our instructions.  We are using tight limit prices to establish positions for our NEW TRADE so we may have to be patient.  

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    The portfolios can be found in the Members Area as well as past portfolios from 2008-2011. Overall, we are 621-273 on nearly 900 real-time recommendations that equals a success rate of 70%. This means, on average, 7-out-of-10 of our option trade recommendations make you money and we hope to have an even better success rate for 2013.

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Trader Comments:
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year of membership rather than the one quarter. Thanks again, and LOVE YOU ALL. REGINA L.

    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help. STEVE T.

    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide. SCOTT H.

    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485 PETER G.

    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming. LAWRENCE O.

    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again! C.J.

    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace! SHAUN

    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good profitable calls. Keep up the good work. MICHAEL K.

    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!
    PARAG P.

    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN. JAY P.

    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You. MIKE

    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks. TRISH D.

    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock! MIN L.

    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you! JOE G.

    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming. GREG F.

    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade. NOEL

    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today. TODD F.

    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you! PAUL H.

    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ” NOEL

    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.” CHRISTIAN

    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.” JOHN

    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.” CHARLES M.

    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.” BRYAN C.

    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.” JOHN H.

    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.” JEFFREY

    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.” ED

    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.” GREG

    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.” KEN

    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.” GARETT

    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.” TERENCE

    Jan. 31 2012
    Rick, new member...Studied all current trades, did some chart work,picked ZNGA, PEP, MGM...Sold on Feb. 2 for $3600.00 profit...Cost for 1-year membership to your newsletter was less than $1000.00..All I have to say..Thank you. John H –

    3/18/11
    Rick, I purchased 10 contracts of the Nike March 85 puts Thursday afternoon for $2.00. Thing is, I was upset because the puts went down to $1.60 or so before the market closed. Well, needless to say Nike didn’t impress Wall Street and when I turned on the computer this morning the puts were worth $7.10! Sold them for a $5,100 profit!. Thanks again, you are the MAN. Chuck J-

    2/3/12
    Hi Rick,

    I will start off with a thank you for your time and dedication to all
    the research you and your team commit yourself to. This is not me just being excited about the profits I have accumulated aka (bank) ! You have helped me get back to the passion I had of researching stocks/options. Keith N-

    Hi Rick,

    I want to share my great results on GMCR. Based on your comments on February 15th, I bought 20 options at $0.28. They closed today at $7.00, which is a 2,300% gain. My $560 dollars turned into $14,000 in less than a month. In decades of trading, this is my single best trade ever. Thank you! By the way, the Dow was down 228 points today and I could care less. What a great trade. It proves the amazing power of options. I am so grateful for your service, which calls it straight all the time, your options trading manual, and most of all, your amazing skill
    at finding winning trades. I have attached a copy of the trade from
    my brokerage screen.

    Hi Rick,

    Wow!! my account it up 70% since i joined last month and market is going the opposite direction. Really appreciate your service. I just wanted to drop a note to say THANK YOU. Hope to be with you guys for a very long time. Mel

    Rick,

    Great call on Fosl I bought the may 120 puts for 3.70 yesterday morning just sold for $32.00 today
    Keep up the great work
    Thank you, Henri

    Rick –

    I bought 10 Deckers Outdoor (DECK) May 55 puts at $0.50 on 4/26/12 and sold them on 4/27/12 for $1.65. I made $1150 in one day. Thanks. I knew something good would happen sooner or later.
    HOW THE HECK did you know Green Mountain Coffee (GMCR) was going to go down 20 points???!!!! I bought 10 of the May 35 puts at $0.49 and then 5 more at .30. I sold them at 5.80. Thank you again.
    You have made a believer out of me. Alan

    Rick –
    I have only been a member for about 6 weeks but I have done well on most of the trades. My first two were QQQ and SPY a month ago and since then I've gotten into the groove and been doing well.
    I try to execute the trades that you recommend as soon as you send them out, sometimes I can't and I miss the Entry price. However, sometimes when I miss the Entry, the price goes down and I get a better price.
    That's exactly what happened with GMCR.
    You recommended it at around $.81 I think, but by the time I got to it, the price was $.27. I bought 100 Puts on Wednesday May 2, 2012 and sold half of them 24 hours later at $5.95 for a nice 2,203% gain. As per your recommendation, as GMCR went above $30 I sold the remaining 50 Puts at $5.50 for a slightly less 2,037% gain.
    On average that one trade netted me a 2,120% gain, entirely based on YOUR recommendation (and a little bit of luck). To put this in real terms, I risked $2,700 on Wednesday and pocketed $54,550 just 24 hours later.
    So uhh, let's do that again real soon!!
    Feel free to use my name. The tax guys have me on speed-dial already anyway. Dennis

    Rick:
    That was awesome on your GMCR pick, I know how risky it can been holding into earnings but you pulled it off. 
    I just started my autotrading with you today and am in on your QQQ play. I look forward this service. 
    I have a busy career and I have tried to follow and trade throughout the day and found it too hard. I hope you continue to have a great year, I plan to go along for the ride. I am starting slow but will pile more in once I have secured some profits. 
    Keep up the good work your trading has been spot on. I am sure you paid your dues to get this point in your career. Anthony

    Rick:

    Great call on GMCR!  I have been trading for about 15 years actively.  This may be the best trade I ever made.  Got in on Monday, April 30 and the stock was up from when you recommended it.  It went up further after I got in.  Here are the facts:
    Monday, April 30th: Bought 15 June 37's at $1.25= $1900 approx
    Thursday, May 3rd: Sold 15 June 37's at $9.30=$13,950
    Gain for the week: $12,050.
    I understand you will not get them all right.  It’s important to ride those winners and as you could tell from my selling price, I sold when the stock went to $28.10, so left a little on the table.  Who can complain.
    Keep the suggestions coming, looking for another jump on your FSLR, one that I have been riding very hard.
    Best regards, Bob
      

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