Trading Target and Best Buy: Using Barchart's Unusual Options to Spot the Next Move

The market's next big move often starts with a whisper in the options pits. Today, Barchart's unusual options screener is flashing signals for two retail giants, revealing fresh institutional positioning that could drive their prices in the days ahead. This tool cuts through the noise by pinpointing contracts where trading volume spikes far above normal levels, a classic sign of large players placing bets before the broader market catches on.

Unusual options activity is defined by that volume spike relative to a contract's open interest. When a stock like Target sees a surge in trades for a particular strike and expiration, it often signals a new position is being built, not just a routine hedge. The screener highlights equities with these significant volume changes, ranking them by relative volume ratios. For traders, this is a real-time look at what the "smart money" is doing with large volume orders, potentially signaling a big move in the security.

The sentiment behind these trades is captured by the put/call ratio. This metric divides the total number of open put positions by open call positions. Since puts are bearish bets and calls are bullish, a ratio below one indicates overall bullish sentiment. Target's current ratio of 0.70 sits well below that threshold, suggesting the options market is leaning bullish on the stock. This isn't just a snapshot; it's a forward-looking gauge of whether the smart money is betting on a climb or preparing for a fall.

Target (TGT): A Bullish Block in the Retail Sector

The unusual options activity for Target is a clear signal of bullish positioning, standing out against a backdrop of broad market selling. Today, the stock saw a significant volume spike, with a large block of 5,000 contracts bought at $1.11. This isn't just routine trading; it's a substantial directional bet that the market is leaning into, especially as other sectors buckle.

That bullish sentiment is reinforced by the stock's put/call ratio of 0.70. This figure, which divides total open put positions by open call positions, sits well below the one-to-one threshold that signals bearishness. A ratio under one indicates the options market is overwhelmingly positioned for a price climb, not a fall. This institutional optimism is the main character in the current news cycle.

The setup here is classic relative strength. While stocks are tumbling across the board due to Middle East tension and rising oil prices, Target's unusual options block suggests smart money is betting on it to hold up-or even outperform. In a volatile market where energy shocks pressure consumer spending, a retailer with a resilient earnings report and a bullish options profile becomes a potential safe haven. The catalyst is clear: the market is selling everything, but the options market is buying Target.

Best Buy (BBY): Unusual Volume and Open Interest

The unusual options activity for Best Buy shows a stock where the market is placing concentrated bets, not just random noise. The data reveals a high relative volume spike, indicating fresh institutional positioning that could drive the stock's near-term path. This isn't a broad-based flurry; it's a targeted signal.

The pattern points to specific strike prices and expirations. While the exact strikes aren't detailed in the evidence, the fact that volume is spiking relative to the 90-day average suggests a block or sweep trade is occurring. This concentration is key. When large players focus on particular strikes, it often signals a targeted price expectation or a hedging move around a known catalyst. The options market is essentially placing a bet on a specific price level within a defined timeframe.

This activity is likely driven by two major near-term events. First, Best Buy is a key player in consumer electronics and home goods, making it a prime candidate for sector rotation as investors look for value. Second, and more immediately, the stock is likely building up to an earnings report. Unusual options activity often spikes ahead of earnings as institutions position for the announcement. The high relative volume indicates smart money is already sizing up the potential move, whether it's a bullish beat or a bearish miss.

The bottom line is that Best Buy's unusual options data suggests a stock with a clear directional bet in the works. The focus on specific strikes and expirations, combined with the high volume, points to a targeted catalyst-most likely earnings. For traders, this is the setup: watch for the earnings date to confirm the catalyst, and monitor the stock's reaction to that event. The options market has already placed its bet.

Trading Strategies and What to Watch

The unusual options data for Target and Best Buy points to specific strategies, but success hinges on identifying the right catalysts and watching for the key risk: fading without a price move.

For Target, the bullish block pattern is a clear signal. A strategy could involve buying calls on TGT if the bullish block pattern continues, betting on a breakout from current levels. The stock is already showing resilience as broader markets sell off on Middle East tension and rising oil prices. With a put/call ratio of 0.70 and a large block of 5,000 contracts bought, the options market is leaning in. The primary catalyst here is the stock's relative strength in a volatile environment. If the bullish sentiment holds, the stock could see a sustained move higher. However, the risk is that this unusual options activity fades without a corresponding price move, especially if broader market sentiment turns sharply negative.

For Best Buy, the strategy is more about monitoring. Traders should watch for the unusual volume to concentrate in specific expirations, which could signal a directional bet on a near-term event. The evidence shows high relative volume, but the exact strikes and expirations aren't detailed. This concentration is key-it would indicate a targeted price expectation. The most likely catalyst is the upcoming earnings report, as unusual options activity often spikes ahead of such announcements. If the volume clusters around a particular strike and expiration, it would suggest smart money is positioning for a specific outcome, whether a beat or a miss. The risk here is similar: the activity could be a one-off hedge or a failed bet that doesn't translate into a sustained price trend.

The bottom line is that unusual options activity is a leading indicator, not a guarantee. It reveals where the smart money is placing its bets, but the market must follow. Traders need to watch for the catalysts-whether it's Target's resilience or Best Buy's earnings-and be ready to act if the price moves in line with the options positioning. If the broader market sells off sharply, even a bullish options profile can be overwhelmed.