Benzinga | Dec 19, 2020 03:40PM EST

Tony Zhang Is Bullish On Best Buy

Tony Zhang of OptionsPlay said on CNBC's "Options Action" it is time to pick up Best Buy Co Inc (NYSE:BBY) shares going into the end of the year. He thinks its chart looks quite weak because the stock broke down below its $105 support level and then failed to return above it. The stock's relative performance to SPDR S&P Retail ETF is also poor, he said.

Despite poor technicals, Zhang wants to take a long position in Best Buy. He likes it because consumer electronics spending is up 29% versus last year, and the company has enough cash to support its dividend and its buyback.

Zhang wants to sell the January $102/$95 put spread for a credit of $2.75. The premium collected is the maximal profit Zhang can make with the trade. His maximal loss is $4.25 and the trade breaks even at $99.25 or 2.65% below the closing price on Friday.