Best Buy Plummets 4.29% on Earnings Optimism: What's Fueling the Volatility?

Summary
• Best Buy (BBY) reports Q2 FY26 earnings beat but shares plunge 4.29% to $72.22
• Intraday range of $70.45–$78.54 reveals sharp selloff after opening at $77.90
• 52-week high of $103.48 remains distant as stock trades near 200D MA of $76.48

Best Buy’s stock is in freefall despite beating Wall Street’s Q2 earnings expectations, with shares dropping nearly 4.3% in volatile intraday trading. The selloff follows a mixed earnings report that highlighted growth in gaming and computing but warned of tariff uncertainty. Traders are now parsing technical indicators and options activity to gauge the next move in a stock that’s down 24.7% year-to-date.

Earnings Optimism vs. Tariff Uncertainty: A Clash of Narratives
Best Buy’s Q2 earnings report delivered a mixed bag: adjusted EPS of $1.28 beat estimates and comparable sales rose 1.6%—its strongest growth in three years. However, the company maintained its full-year guidance amid tariff-related uncertainty, citing potential impacts on consumer spending and margins. CEO Corie Barry emphasized confidence in the back-half of 2026 but acknowledged the need for caution. The stock’s sharp decline suggests investors are pricing in risks from tariffs, higher prices on key products, and a challenging retail environment where appliance sales remain weak. Meanwhile, the launch of a third-party marketplace has yet to offset broader macroeconomic headwinds.

Options Playbook: Capitalizing on Volatility and Key Levels
• MACD: 1.66 (bullish), Signal Line: 1.15, Histogram: 0.51 (momentum)
• RSI: 71.99 (overbought), Bollinger Bands: $63.61–$77.45 (wide range)
• 200D MA: $76.48 (current price below), 30D MA: $69.45 (support candidate)

Best Buy’s technical profile shows a short-term bullish trend but long-term consolidation. The RSI near overbought territory and wide Bollinger Bands suggest heightened volatility. Traders should focus on key levels: the 200D MA at $76.48 and the 30D MA at $69.45. The options chain reveals two high-leverage contracts with favorable risk-reward profiles:

• BBY20250905P72 (Put, $72 strike, 2025-09-05):
- IV: 36.17% (moderate), Leverage: 49.22%, Delta: -0.455, Theta: -0.108, Gamma: 0.096, Turnover: 7,794
- Payoff at 5% downside: $72.22 → $68.61 → max(0, $72 - $68.61) = $3.39 gain
- High leverage and moderate delta make this ideal for a bearish play if support breaks.

• BBY20250905P73 (Put, $73 strike, 2025-09-05):
- IV: 30.89% (reasonable), Leverage: 41.11%, Delta: -0.564, Theta: -0.099, Gamma: 0.112, Turnover: 10,002
- Payoff at 5% downside: $72.22 → $68.61 → max(0, $73 - $68.61) = $4.39 gain
- Strong gamma and liquidity make this a top pick for aggressive short-term bearish bets.

Action: Aggressive bears may consider BBY20250905P73 if the stock breaks below $70.53 (middle Bollinger Band). For a balanced approach, BBY20250905P72 offers leverage with moderate risk.

Backtest Best Buy Stock Performance

Nowhere to Hide: Best Buy’s Crossroads and What to Watch Next
Best Buy’s sharp selloff reflects investor skepticism about its ability to navigate tariffs and shifting consumer behavior, despite Q2 outperformance. The stock’s technicals suggest a critical test of the $70.53 support level, with a breakdown potentially triggering a retest of the 52-week low at $54.99. Meanwhile, Walmart (WMT), the sector leader, is up 0.37%, signaling broader retail sector resilience. Traders should monitor the 200D MA at $76.48 as a key resistance and watch for a potential rebound into the $71.59–$71.82 support zone. Act now: Position for a bearish breakout below $70.53 or a short-covering rally above $72.22.