Today we are looking at taking advantage of Mr. Schultz’s leverage buy out (LBO) of Best Buy (BBY, quote) and as the current Best Buy board drag their feet as if they are not sure what to do with the company it gets worse for Best Buy and better for Mr. Schultz. Mr. Schultz should be able to get the deal done with cheap financing.  On the announcement of the LBO the stock jumped towards the $23.50 level before heading lower as it was clear the board was not going to act quickly.

So if the longer it takes the worst for Best Buy and their shareholders then at what price could the LBO deal come in at?   The option market may have forecasted the number yesterday with large volume along a single large buyer in the November 19 strike level could be good level to look at.

It’s not likely the deal will be completed but very well could be structured and an agreed price could be as soon.

Best Buy’s Trade Setup

Consider buying a Best Buy vertical call spread to define and reduce risk.  Consider buying the Nov 18 Call for $1.00 and selling the Nov 22 call for $.30 for a total debt of $0.70.  Those willing to risk an extra $.10 for additional $1 of upside can sell the Nov 23 call in place of the Nov 22 call.  Since on the announcement price did not get over 24 any additional upside is not warrant.

Remember to check with your broker as trading options pose risk.