Bear Signal Sounds on Bed Bath & Beyond Stock

BBBY has had a volatile run since early October

Shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) saw a healthy bull gap in early October, just after the company announced Mark Tritton as its new CEO. Since then, the equity has received a handful of bull notes, but quickly backpedaled after revealing an e-mail hacking incident later that month. And although BBBY still clings to a 13% year-to-date gain, at $12.66, a historic bear signal may be telling bulls to cash out while they still can.

According to Schaeffer's Senior Quantitative Analyst Rocky White, BBBY is trading within one standard deviation of its 10-month moving average, after spending most of its time below this trendline in recent years. Similar tests of this trendline resistance have occurred seven other times over the past 15 years, resulting in an average three-month loss of 9.8%, with nearly 70% of the returns negative. Another plunge of this magnitude from current levels would put BBBY back below $12, quickly erasing any remaining gains from its aforementioned bull gap.

Digging deeper, Bed Bath & Beyond stock's options traders have been call-heavy in recent weeks. This is per the equity's 10-day call/put volume ratio of 5.54 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 98th annual percentile, meaning calls have been purchased over puts at a faster-than-usual clip.

Short-term BBBY options are affordable to purchaseright now, too, according to the stock's Schaeffer's Volatility Index (SVI) of 64%, which ranks in the 24th percentile of its annual range. In other words, near-term options are pricing in unusually low volatility expectations for the retail stock.