Leading domestics retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY) closed more than 9% higher today after the one-two punch of a well-received earnings report and a brokerage upgrade. The company announced first-quarter results of 34 cents per share, a whopping nine cents better than analysts were expecting. Revenue edged 2.8% higher year over year. The one gray lining was same-store sales numbers, which drifted 1.6% lower during the reporting period. Reacting to this after-the-close earnings report, Cowen & Co. upgraded the shares this morning to "neutral" from "underperform." The brokerage noted that BBBY has been able to cut advertising expenses now that its chief competitor, LInens n' Things, has filed for bankruptcy. Cowen also notes that BBBY has reduced its payroll expenses.
Implied volatility contracted slightly today with earnings out of the way. The pricing of front-month, near-the-money straddles has moved lower as a result. The July 28 puts were active today, with more than 4,000 contracts changing hands. These were initiated by both buyers and sellers.
Beth works for The Options News Network (www.ONN.tv), which provides daily options commentary. The above comments are not intended as trading advice.
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