Bed Bath & Beyond Stock Forecast: BBBY soars 40% on Ryan Cohen out-of-the-money calls

BBBY stock up more than 40% on Wednesday's premarket.
Bed Bath & Beyond stock has gained 300% in past month.
GameStop chairman Ryan Cohen purchased 16,000 call contracts.

Clay Webster FXStreet

Bed Bath & Beyond (BBBY) stock is up 31% at $27.22 in Wednesday's premarket a day after it was disclosed that major investor Ryan Cohen had purchased at least 16,000 call contracts on BBBY with strikes above $60. BBBY stock advanced 29% on Tuesday to $20.65. The meme stock is up roughly 300% over the past month despite the fact that many analysts believe the home goods retailer is headed for bankruptcy.

Also read: Exxon Mobil Deep Dive: Falling oil prices lead to $94 price target

BBBY stock news

So what is the deal with Ryan Cohen? Cohen, the savior of Chewy (CHWY) and chairman of GameStop (GME), has become the most high-profile backer of meme stocks. Cohen is very much seen as a retail whiz kid after he was able to turn around Chewy.com.

Cohen's 16,000 call options, expiring in January 2023, have strike prices between $60 and $80. This would require an immense short squeeze, possibly the Mother of All Squeezes to borrow a phrase from the AMC apes. These could only be cashed out if BBBY stock rises on the order of at least 300% to 400%, although it is possible he could sell them as they are already rising in value quickly. The options purchases were made through Cohen's RC Ventures investment vehicle.

Cohen was already reported as owning more than 11% of BBBY back in March, and much of his purchases were estimated to be made above $20 a share though the stock has fallen below $5 in recent months before the recent surge in popularity. The retailer lost about $224 million in operating income during the fiscal first quarter and reported only $107 million in cash. Loop Capital gave the struggling retailer a $1 price target earlier this month, saying that it was headed the way of Sears.

BBBY stock forecast

BBBY stock has already reach the area of resistance from March between $28 and $30 in Wednesday's premarket. Above there sits the $39 to $40 region of resistance from June 2021. June 2, 2021 saw a high of $44.51. After that is only the January 27, 2021 high of $53.90 during the first wave of meme stock hysteria. For Cohen's call options to be triggered, BBBY stock needs to climb about 60% above that January 2021 high. The stock's all-time high is at $80.82 from January 2014. Just since July BBBY stock has gone from oversold to overbought on the Relative Strength Index (RSI).

BBBY daily chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.