How I Lost $75 Grand on Best Buy
The Best Way to Buy This Retailer Ahead of Earnings
Back when I was a market maker, Best Buy Co. Inc. (NYSE:BBY) was one of my stocks.
I was 24 years old, making markets on the electronics retailer. So now, nearly two decades later, I’ve got a ton of experience trading this name.
Tomorrow morning at 8 AM ET, BBY will report earnings. And this is one stock that has a history of absolutely crushing its reports.
I would know – I once lost $75,000 after a BBY earnings call.
Long story short, I was short calls on BBY heading into the report. I was heading out on vacation, so I asked a clerk to buy those calls back before the company reported earnings.
Well, he forgot. And after the report, BBY shot higher…
Costing me a cool $75K.
That’s one trade I’m not going to repeat. I’ll never go bearish on BBY through earnings again, and I’ll make sure of it myself.
Instead, I’ve got a bullish trade idea if you want to take a shot on a BBY earnings blow-out.
BBY has always been an earnings stock. Its Q1 report beat expectations by over 50%, and I see a similar story playing out this time around.
The September 17 $120-$125 call spread is only about $0.90 right now. To execute it, you’d buy the $120 call while simultaneously selling the $125 call to cut your risk.
That’s a relatively inexpensive bet into earnings on BBY popping higher.
But remember, trading into earnings can be risky – so make sure you practice risk management here.
I’m keeping a close eye on where BBY will head after tomorrow morning’s report.
Live on Thursday – More Asymmetric Trades Coming Your Way
I’m going live this Thursday, August 26 at 12:30 PM ET for one of our most exciting Profit Takeover trading sessions yet.
Per usual, I’ll break down the day’s volatility…
Show you my top trades of the week…
And hand you all the details of a low-risk recommendation with the potential to return an asymmetric profit.
When I say low-risk, I mean teeny, tiny, miniscule risk…
This week’s recommendation will be $1.00 or less to get into.
Mark your calendar for Thursday’s live trading session right now by clicking here.
You won’t want to miss it – because there’s more dollar-or-less recommendations coming your way soon. And on Thursday, I’ll show you how you can make sure you receive every last one.
Just add this event to your calendar now.
- Macy’s Inc. (NYSE:M)
My wife runs a fashion blog, and it gives me special insight into retail stocks. One of those stocks is M – a retailer that I’ve made a good amount of money on this year. M had a breakout first quarter, as we saw on its August 19 earnings report. Since then, the stock has risen more than 23% higher.
And I think we could see a similar fate in JWN…
- Nordstrom Inc. (NYSE:JWN)
JWN has been on my radar all year – just look at the Profit Takeover portfolio. Our longest-held position is the JWN January $40 calls.
The luxury retailer reports tomorrow after the close, and from the intel I’ve gotten from my wife, I think it could blow the doors off.
This is a risky bet, but if you want to take a shot on earnings blowing JWN higher, then you can look at the August 27 $36 calls for $1.50. I think JWN could make a run over $40 on these earnings, putting our January call in-the-money (ITM).
- Energy Select Sector SPDR Fund (NYSEARCA:XLE)
It’s no secret that oil names have gotten smoked. XLE, which holds names like Exxon, Chevron, and ConocoPhillips, is down 12% since the beginning of June.
Most oil names have spent the summer months on the downhill. But now, I think these names are in a decent value area. One that’s going to start attracting buyers, shooting the XLE and its holdings higher.
- Robinhood Markets Inc. (Nasdaq:HOOD)
After a business files to go public, the official “quiet period” begins. This means that the company can’t release any new information to the public. Not until 40 days after the stock has been trading, that is.
September 7 marks the end of HOOD’s quiet period. That means some higher-ups at the trading platform might start talking – and this stock could start really moving again in a couple of weeks.
- Zynga Inc. (Nasdaq:ZNGA)
There’s a ton of bullish flow in this game developer right now. The past few trading days, it’s been going straight up in a slow and methodical fashion.
Now, ZNGA got smoked after its last earnings report. Prior to the report, it was trading around $12 per share. Today, it’s under $9. And with a ton of big money pouring into the $9 calls, I think this stock could make a run at $10 to put it back at the low end of its normal range.
VIX Traffic Light
Despite the jump to almost 23 last week, the VIX is in a contango again today:
From this, you can tell that the VIX belongs around 12, not 21. And it’ll find its way back down to that level sooner rather than later.
Realized vol is only about 7%. We could see the VIX make a run down to 15 this week – it’s already on its way.
And as the VIX drops, the S&P should rise. I think it’s possible we’ll see 4,500 by Friday, in fact…
Handing the VIX its behind on a silver platter, and turning our VIX light a vibrant shade of red.
That’s all for today, folks. Remember to click here and add this week’s live Profit Takeover trading session to your calendar.
I can’t wait to talk to you then…
August 23 2021
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