I wanted to update the two trades I mentioned in the Monday Morning Playbook from last night’s Weekly Wrap. Best Buy (BBY, $33.70, up $1.40) got a price upgrade from Goldman Sachs (GS, $106.30, up $8.98) to $35 from $33 based on higher sales expectations. I had mentioned Best Buy could see a 10% increase in domestic sales and Goldman backed that theory up and maintained its “Buy” rating.
The Best Buy April 35 calls (BBYDG, $1.70, up $0.35) opened this morning at $1.50 but you know we never buy at the open. They came down to $1.38 but not down to our $1.00-$1.25 target. If you jumped in at $1.40-$1.50 just remember the company reports earnings on Thursday.
As far as Deutsche Bank (DB, $40.81, up $3.30), the stock is rallying after the toxic asset plan was unveiled this morning and the 10% move took us out of our strangle trade. I did favor the April 40 calls (DBDY, $4.20, up $0.70) and the April 45 calls (DBDZ, $2.20, up $0.70) but even those got expensive, quickly.
IBM (IBM, $96.06, up $3.55) continues to catch fire and is up another 4% this morning. The April 100 calls (IBMDT, $2.00, up $0.75) have doubled from the roll-over of the April 95 calls (IBMDS, $4.40, up $1.50) as IBM makes an assault on $100.