Best Buy (BBY, $38.76, up $5.30) bashed the cover off the ball and reported earnings that were higher than what Wall Street had been expecting. The stock is up over 15% this morning and has traded as high as $38.91 and to a low of $36.79.

Best Buy’s profit fell 23% for the quarter, to $570 million, or $1.35 per share, but the company actually earned $1.61 a share. Best Buy took some restructuring charges which pulled down EPS (earnings per share) but Wall Street had been expecting $1.40 a share. So they did and they didn’t beat earnings depending on what you read as analysts were expecting a $1.40 per share. However, when Best Buy also provided a better-than-expected outlook for the next year, analysts gave them an A+ for their report card and the bulls have made them the teacher’s pet today.

This stock was in the Weekly Wrap’s Monday Morning Playbook and I had targeted the Best Buy April 35 calls (BBYDG, $4.70, up $3.15). As you can see, they are up 200% today on the stock’s surge and we had set a target of $1.00-$1.25 order to get into the position. On Monday, these calls opened at $1.50 and came down to $1.38 but not our $1.00-$1.25 target. However, if you had set a limit order of $1.25 or better to get filled on these contracts, then you were filled yesterday.

In other words, if you had placed a limit order with your broker to buy 10 contracts at $1.25 then you would have been filled yesterday at 2pm when the stock traded to a low of $32.27. A lot of you tell me you can’t always follow the market so that is why I came up with the “playbook” and then update things through the blog.

Most days, I can’t watch the market all day long either so I use limit orders and targets and stops to help me if I’m away from the office. The point is, if you believed that Best Buy was gonna have a super quarter and threw down $1,250, then you are now looking at $4,700. Bingo. A $3,500 profit for planning the trade.

Anyway, you know the drill by now. Set stops at $4.00.

Rick Rouse

Note: United States Steel (X, $24.65, up $1.18) was up right out of the gate and the April 25 calls (XOKDE, $2.35, up $0.65) have not made it down to our $1.40 target. I knew I was probably a day late but not a dollar short for this one so we will have to wait. I don’t think the calls will get below $2.00 so go ahead and cancel this one. It’s getting close to Friday so we will have to be careful with what we leave open.