hhgregg, Inc (HGG) is a consumer electronic retailer operating 208 stores in states across the country. The company’s stock is currently trading around $8.45 in a 52 week range of $7.23-$20.75. The stock has underperformed the market over the past year with shares down 13% in the past 12 months. Options action in today’s trading session would however suggest that traders believe the stock will rally through April
expiration. Early in the session a trader sold 3,000 HGG Apr
6 puts to buy 3,000 Apr
9 calls for a net debit of $0.55. This bullish
risk reversal carries a high level of risk and suggests that this trader’s level of conviction is relatively high. This block also represents volume
over 3 times the average daily option volume
in HGG. Although the stock is trading below the Ichimoku Cloud
it has rallied hard off of its 52 week lows in over the past week. We believe that order flow this strong and the strength in very recent price action is justification for a long position in HGG.