Best Buy is also set to report earnings next week, and if options activity is any indication, the company could miss estimates, according to Pete and Jon Najarian. Last month bears bought more than 11,000 puts at the 52.50 strike price. The stock closed Thursday at $55.93.
Best Buy is up more than 30 percent this year — one of the few retailers in the green as rising pressure from Amazon and a shift in consumer preferences have sent retail stocks tumbling.
While Jon Najarian likes the company, he’s following the bears this time around. He believes one of Best Buy’s moves to compete with Amazon may actually pressure the company’s profit.
“They [Best Buy] just initiated free shipping with no minimums, and I think that could impact both revenue on the positive side, but also profitability, so I like the puts in Best Buy ahead of the earnings,” Jon said.
He believes the stock could test “$50 again” after it reports earnings Thursday before the bell. That represents a more than 10 percent decline from current levels.
According to FactSet estimates, analysts are expecting the retailer to report earnings per share of 73 cents on $9.36 billion in revenue.
Elsewhere in the market, the Najarians have seen high options volume trading in JD.com and Anadarko Petroleum.
