Trade of the Day: Best Buy Co Inc (BBY)

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Sears Holdings Corp (NASDAQ:SHLD) announced Thursday that the company would start selling its well-known Kenmore brand appliances through, Inc. (NASDAQ:AMZN). This is a significant shift in strategy, although it was probably an inevitability. The news hit home-improvement and appliance-resellers like Home Depot Inc (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW) and Best Buy Co Inc (NYSE:BBY).

We like the opportunity to profit from a bearish move in BBY for two reasons. First, the stock will be under margin pressure in its appliance business, and it appears that AMZN is building a services arm to compete with BBY’s “Geek Squad.” Services revenue at BBY is already being hammered by low customer satisfaction, and this news is likely to have an additional bearish impact on the company.

‘Buy to open’ the BBY August 52.50 Puts (BBY170818P00052500) for a maximum price of $1.20.

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