- Bed Bath & Beyond (BBBY) reports 1st Quarter earnings after the close (4:15 ET)
- Consensus EPS estimates a loss of ($1.41) on revenue $1.32 bil
Most BBBY stores were closed for April and May. The company has already given some updates on that and also detailed their rising online sales attempting to fill in the gap. Despite what is known the options market is looking for a fairly significant move on the event. Here's the 3 month chart, showing a 34% expected expected move, with 15% expected this week. (charts via OptionsAI technology):
1 month highlighting this week:
Ways to Play
Bullish - Since this is a $10 stock options can be tricky but luckily BBBY has half dollar strikes near term and dollar strikes farther out. Let's dive into it and first check on a bullish move to consensus over the summer, with August expiration, via OptionsAI:
The +10/-13 call spread is interesting as it has a breakeven of 11.03 and can make up to 1.97 at $13 in the stock. The sale on the 13 calls is roughly .75 which helps lower the breakeven from the 10 call outright ~1.80.
For those looking for a little more upside, the call spread can be widened, creating a +10/-15 call spread, selling the 15 calls ~.40. Gaining those extra two dollars of upside and only paying .35 extra may be worth it. Here's how that Aug +10/-15 call spread looks on the chart:
It has a breakeven of 11.45, within the expected move of the event itself, and would show nice gains on a move higher towards 15 over the summer versus its risk.
Neutral - For those looking to sell the earnings move, based on the idea that not much new information will come from the earnings event itself, I think it makes sense to look out to July regular expiration for more liquidity. Via OptionsAI:
In this case the +8/-8.5/-12.5/+13 Iron Condor is near 1 to 1 risk reward and essentially creates a profitable zone inside the expected move for the next week.