Short on Best Buy

It was announced earlier today that the CEO of Best Buy (BBY) sold his 44% of his personal stake in his company, which doesn't inspire confidence in the company's near-term outlook. Insider buying and selling can be a good barometer for the health of a company, we especially like it when insiders are buying their own shares. In Best Buy's case, they continue to transform the company into a house of brands, and in an eCommerce world dominated by Amazon, they will become a niche retailer for consumers who need hand holding when making electronics purchases.

Best Buy shares fell 10% on their earnings report on 5/24, and shares trade at $31.05, about 3% above the trough from their earnings release. Shares trade down 4% today, and we like being on the short side of this company in the near term.

We are buying the August $30 Puts for $1.32, and plan to sell these back within the next few weeks. The S&P and Dow have been rallying since 5/19, and there is significant upside resistance on the S&P between 2,105 (right now) and 2,130. A broader market pullback could send BBY shares lower too.