Put Options on BBBY on 6/30/2014

Bed Bath & Beyond (BBBY) operates a chain of retail stores.

It sells a range of domestic merchandise, including bed linens and related items, bath items, and kitchen textiles; and home furnishings, such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables, and certain juvenile products.

The company also offers health and beauty care items, and giftware and household items, as well as infant and toddler merchandise. Bed Bath & Beyond Inc. operates stores under the names of Bed Bath & Beyond (BBB); Christmas Tree Shops; Christmas Tree Shops andThat! or andThat! (CTS); Harmon or Harmon Face Values (Harmon); buybuy BABY (Baby); and World Market, Cost Plus World Market, and Cost Plus (Cost Plus World Market). In addition, it provides various textile products, amenities, and other goods to institutional customers in the hospitality, cruise line, food service, healthcare, and other industries.

As of May 31, 2014, the company operated 1,504 stores consisting of 1,016 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico, and Canada; 268 stores under the World Market, Cost Plus World Market, or Cost Plus names; 92 buybuy BABY stores; 78 stores under the Christmas Tree Shops, Christmas Tree Shops andThat!, or andThat! names; and 50 stores under the Harmon or Harmon Face Values names. 

Shares have formed a bearish "flag" after the firm reported earnings that fell shy of expectations. Gross profit decreased 0.2% to $1.03 billion and operating profit decreased 6.9% to $300.7 million, and in relation the gross margin contracted 70 basis points to 38.8% and the operating margin contracted 110 basis points to 11.3%. On the conference call, Bed Bath & Beyond's management attributed the large dips in these profitability measures to increased coupon use, increased expenses related to free shipping offers on its websites, a shift in the mix of merchandise sold to lower-margin items, and increased selling, general, and administrative expenses.

52-Week Trading Range: $54.96 - $80.82

Last Trade: $57.45

Here is the trade: 

Trade Buy 1 August $57.50 Put at $1.40 For a net debit of $1.40 Profit/Loss Analysis Breakeven at $56.10 Maximum profit is unbounded Maximum loss is ($140.00) at strike of $58.00 Closing Summary Sold 1 August $57.50 Put at $0.00

Position closed on 8/16/2014 at price of $0.00 with a -100.00% loss in 47 days.

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