Best Buy's most recent trend suggests a bullish bias. One trading opportunity on Best Buy is a Bull Put Spread using a strike $113.00 short put and a strike $108.00 long put offers a potential 54.8% return on risk over the next 22 calendar days. Maximum profit would be generated if the Bull Put Spread were to expire worthless, which would occur if the stock were above $113.00 by expiration. The full premium credit of $1.77 would be kept by the premium seller. The risk of $3.23 would be incurred if the stock dropped below the $108.00 long put strike price.
The 5-day moving average is moving up which suggests that the short-term momentum for Best Buy is bullish and the probability of a rise in share price is higher if the stock starts trending.
The 20-day moving average is moving up which suggests that the medium-term momentum for Best Buy is bullish.
The RSI indicator is at 78.42 level which suggests that the stock is neither overbought nor oversold at this time.
To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here
LATEST NEWS for Best Buy
Best Buy (BBY) Stock Sinks As Market Gains: What You Should Know
Mon, 25 Jan 2021 22:50:10 +0000
Best Buy (BBY) closed at $113.74 in the latest trading session, marking a -1.04% move from the prior day.
Here's Why I Think Best Buy (NYSE:BBY) Might Deserve Your Attention Today
Sun, 24 Jan 2021 07:08:52 +0000
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling…
Canoo’s Eccentricities Are Both a Blessing and a Curse
Fri, 22 Jan 2021 20:51:22 +0000
Though electric vehicles (EVs) have been stealing headlines lately, most of the sentiment has arguably focused on sector king Tesla (NASDAQ:TSLA). On the surface, that doesn’t bode particularly well for EV upstarts like Canoo (NASDAQ:GOEV). Then again, competition is always good, driving more innovation and delivering lower prices for the consumer. So, is GOEV stock a buy for your portfolio? Source: Canoo media It’s not a clear-cut answer, as I hope to explain. From the immediate collective emotional state, GOEV stock certainly benefits from compelling tailwinds. First and foremost, it’s official: Joe Biden is the 46th President of the United States. As you know, Biden has been hammering environmental causes throughout his campaign. With Democrats controlling Congress, he’ll be sure to aggressively push through climate-related issues as he’s already done. Frankly, that’s a huge catalyst for GOEV stock and clean-energy-related companies.InvestorPlace – Stock Market News, Stock Advice & Trading Tips Second, Canoo isn’t just a “linear” competitor to Tesla. Indeed, the upstart rival has brought innovative platforms and thinking to the game. For starters, its “skateboard” architecture that allows myriad vehicle designs under a single base frame not only saves costs, but it also attracted the attention of automakers like Hyundai and Kia. One of the key characteristics of this skateboard format is that it allows manufacturers to adapt to shifting consumer trends quickly. Given that expectations regarding consumer experiences have never been higher, this architectural innovation could potentially swing GOEV stock higher. 7 Great Sub-$20 Stocks to Buy After Inauguration Day Also, Canoo is deploying a subscription model for its consumer EV. Having such a model would be incredibly convenient for consumers. Theoretically, it will also help transition prospective buyers or those on the fence into EVs from combustion cars. That’s the kind of smart thinking that I like to see from startups looking to disrupt a deeply ingrained industry. Question Marks Also Hang Over GOEV Stock Nevertheless, like any endeavor, Canoo has some pros and cons. Right off the top, the design element is going to be controversial. Previously, I described the Canoo EV as a toaster on wheels. Sure, some people will like the look. At scale, I’m beginning to have my doubts. That’s because automobiles naturally go through an evolution of design over many years. You might even say that the overriding automotive design motif of a set time described the culture of that period. The problem with Canoo’s drivable toaster is that it’s not design evolution but regression. Will consumers go for it? Maybe. But it’s something to keep in mind before getting too heavily involved with GOEV stock. More critically, as I study the nuances of electrification of transportation, EV upstarts may have trouble attracting consumers on the reasonable end of the income range. For instance, when people talk about charging at home, they almost always mean that they already installed a level 2 charging system (240 volts) in their garage. Charging an EV with a standard 120V system will take several days. You can probably get an electrician to do the conversion for around $1,000 or so. But the bigger issue is that homeownership rates for millennials have lagged that of prior generations. So, much of Canoo’s key demographic probably won’t be able to enjoy at-home charging (because they live in restrictive apartments or condominiums). Therefore, public charging is something that many young Canoo buyers must use. That leads to other inconveniences, because public charging can be confusing and frustrating, especially for non-Tesla drivers. Further, fast charging may improve the inconvenient aspect, but it’s not great for the battery to fast charge all the time. While these headwinds may not sound like a big deal, add them up over time, and they can drag on customers. Canoo’s Subscription Risk? And that brings me to my final concern about GOEV stock, the underlying subscription service. Typically, if you bought an EV from a “standard” automaker, you’re stuck with the vehicle. Essentially, a normal automotive business model forces petrol heads to learn to love EVs. But with Canoo’s subscription service that requires only a minimum one-month term, why, if you have a problem with the zero-emissions lifestyle, you can return that puppy. You’re just out one car payment — no biggie! Thus, GOEV stock may have a pre-recovery Best Buy (NYSE:BBY) risk. Before Best Buy transitioned the company to be more relevant to the consumer, it was treated as a showroom floor for Amazon (NASDAQ:AMZN). If that happens to Canoo, and it becomes a try-before-you-buy-something-else platform, it will do a service to EVs, perhaps, but not for itself. And bringing it back full circle, that’s the risk of having an uninspiring design. Combined with a subscription model, you’re inviting customers with ulterior motives. However, I don’t want to get too negative. Again, Canoo’s skateboard architecture could be the real deal. Certainly Hyundai thinks so, and that’s not a fly-by-night operation. Bottom line, I think there’s enough here for speculators. But if you’re a conservative investor, you may want to wait for GOEV stock to lose some of its choppiness and gain some established composure before moving in. On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner It doesn’t matter if you have $500 in savings or $5 million. Do this now. The post Canooâs Eccentricities Are Both a Blessing and a Curse appeared first on InvestorPlace.
GameStop closes up 51% after chaotic day of trading
Fri, 22 Jan 2021 19:26:35 +0000
GameStop (GME) shares closed 51% higher at $65.01 each on Friday after an apparent crush on short-sellers.
How the Internet Sent GameStop Stock Up 1,000% — And Where It’s Going Next
Fri, 22 Jan 2021 17:08:28 +0000
In December, I wrote an article suggesting investors write covered calls on GameStop (NYSE:GME): buy GME stock and profit from the fat premiums on call options. It’s a conservative tech investor’s way of making money on a stock that’s too hot to buy, but too strong to ignore. Source: Northfoto / Shutterstock.com Investors following that strategy would have seen a 25% gain in three weeks — not bad for an options strategy with capped upside. But with shares now up 1,000% since last year, people are starting to ask themselves: “How did we get here in the first place?” The answer is a complicated mix of finance, momentum and a virtual game of chicken. So, here’s how we got to where we are, and where GME stock might head next. GME Stock: Back From the Dead In a year where both Microsoft’s (NASDAQ:MSFT) Xbox and Sony’s (NYSE:SNE) PlayStation finally released digital-only versions of their consoles, you might think that GameStop stock investors would have panicked. For years, the company had resisted calls to modernize. Instead, the brick-and-mortar relic stayed alive thanks to its cash cow: the lucrative used-game market. And now that many next-generation game consoles will no longer need physical games, GME stock looked set to fall.InvestorPlace – Stock Market News, Stock Advice & Trading Tips 7 Great Sub-$20 Stocks to Buy After Inauguration Day GameStop shares, however, did precisely the opposite of what you might expect. Proving that no amount of wisdom can predict the madness of crowds (or internet users), shares rose 150% by the time I suggested taking gains off the table. Since then, the stock has proceeded to triple. Why Is GME Stock Up 1,000%? Long-term investors with a sense of humor might remember the Financial Times suggesting that the then-dying RadioShack could start selling fruit baskets or turning stores into Zumba studios to survive. (A small town in Weaverville, CA seems to have done just that.) That’s because, in the world of brick-and-mortar retail, those that don’t adapt end up like Blockbuster and Circuit City — sitting in bankruptcy court and explaining lawyer fees to angry investors. For years, GameStop seemed destined for the same scrapheap. Though management successfully lobbied Microsoft in 2013 to keep disc drives in the Xbox One, they failed to use that lifeline to migrate toward online and mobile games. But don’t discount the short-term. The release of the blockbuster PlayStation 5 and Xbox Series X threw Wall Street’s tea leaves into disarray. With both consoles selling out within minutes, analysts scrambled to revise GameStop’s estimates for the near term. Wall Street now expects sales to rise 4.5% this quarter, representing a reversal after years of decline. And bullish retail investors went wild, sending the stock from the $4 range to $14. The Internet Spins GME Stock Out of Control But retail investors weren’t done quite yet. By December, a strange phenomenon started to appear: Open interest in GME calls had reached unprecedented levels as online investors egged each other on. In other words, investors were not only betting GME stock would go up but also that gains would come sooner rather than later. And whenever this happens, investors can inadvertently start a feedback loop. That’s because buying call options en-masse also force market makers to buy the underlying security — in this case, GME shares. It’s a process known as delta hedging, where market makers like the New York Stock Exchange look to keep a neutral position. Meanwhile, rising share prices force short sellers out of their positions, causing them to become buyers in what’s known as a “short squeeze.” That forces up shares even further, causing even more online users to (self-reportedly) buy in, and so on. Eventually, the company’s shares end up as a caricature of its intended price. And how long can the mania go? A) If someone’s had the misfortune of going short, the feedback loop will usually continue just long enough to force them out of their position at a loss. B) If they’re long, the loop will last just long enough to when they’ve convinced themselves that the stock is a long-term winner. And C) if they don’t own the stock and decide to buy in, that’s usually the precise moment that the bottom falls out. Lessons From GNC It’s not the first time a brick-and-mortar store caused such an investor frenzy. Almost a decade ago, GNC found itself in the eye of the protein-supplement storm. What was once the purview of bodybuilders suddenly saw its 15-minutes of fame. Pantries across the U.S. stocked up on the protein “miracle cure” for everything from weight loss to muscle building, and GNC’s stock rose from $15 in 2012 to almost $60 by the end of 2013. Back then, however, options trading was far more limited. Robinhood was only just getting started, and most retail investors didn’t have the tools needed to send market makers and short sellers into an upward-spiraling feedback loop. Even as bearish short interest in GNC stock mounted, short squeezes rarely amounted to more than 20% price jumps. GameStop, on the other hand, makes GNC look like child’s play. Today, GameStop has a 109% short interest ratio, meaning there are more shares sold short than exist. And GME’s open interest of nearly 850,000 options is seven times greater than Best Buy’s (NYSE:BBY) 115,000, even though GME is less than a tenth of the latter company’s size. While Citron Research’s $20 price target for GameStop could be right, there’s nothing that can stop retail investors pushing GME to $60 and beyond in the short term. There simply aren’t enough shares to sell short. What’s Next for GME Stock? It’s impossible to know how far GME can rise from here. The company now trades for 373 times its Shiller price-to-earnings (P/E) ratio, a measure of long-term value. Today, shares are looking less like Best Buy’s steady-state 36x multiple and more like Amazon’s (NASDAQ:AMZN) high-growth 355x. So, when your company’s share value isn’t attached to real life, what’s to stop it from rising to 600 times or more? The 17th-century Dutch-tulip-bulb mania offers a sobering reminder of humanity’s ability to ignore reality. At their peak, the most expensive bulbs could cost more than a house. Those insisting to profit from GME should consider selling options and hedging with a position in the underlying security — much like what professional market makers do. With implied volatility close to 180%, GME options are selling for fat margins; at-the-money 2022 calls cost almost $16. But don’t go naked short or long GameStop and expect easy wins. As we collectively stumble through 2021, it would be wise to remember this: GME stock could continue a run to $60 and beyond if the short squeeze (and internet cheerleaders) continue their gleeful mischief. But unless GameStop management uses the momentum to revamp its business, it would all be for nothing. Because, as hundreds of defunct brick-and-mortar companies can attest, if you won’t stop yourself from pursuing an outdated business model, then a bankruptcy court will eventually do it for you. On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner It doesn’t matter if you have $500 in savings or $5 million. Do this now. The post How the Internet Sent GameStop Stock Up 1,000% â And Where It’s Going Next appeared first on InvestorPlace.
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