Bed Bath & Beyond soars 70% as meme traders talk up Ryan Cohen's call options purchase

cnbc.com:

Bed Bath & Beyond shares soared on Tuesday as retail traders active on social media piled into the stock, encouraged by news that GameStop chairman Ryan Cohen placed another bet on the struggling retailer.

Shares of Bed Bath & Beyond skyrocketed more than 70% to an intraday high of $28.04 in midday trading Tuesday amid multiple trading halts due to volatility. The stock last traded 65% higher.

A regulatory filing Monday evening showed that Cohen's venture capital firm RC Ventures bought distant out-of-the-money call options on more than 1.6 million Bed Bath & Beyond shares with strike prices between $60 and $80.

Investors profit from calls when the underlying securities rise in prices. The strike price is where the security can be bought by the option holder, meaning Cohen is betting that Bed Bath & Beyond can rise as high as $80 a share. The stock closed Monday at $16.

The call options that Cohen purchased expire in January 2023.

The new purchase grabbed the attention of retail traders on Reddit's WallStreetBets forum. The ticker BBBY became the most popular mention on the chat room Tuesday, according to alternative data provider Quiver Quantitative.

Trading volumes in Bed Bath & Beyond exploded on Tuesday with more than 160 million shares changing hands as of noon ET. The company only has about 80 million shares outstanding, according to a regulatory filing.

Cohen first revealed he held a nearly 10% stake in Bed Bath & Beyond through RC Ventures in early March. FactSet says his holdings amounted to 11.82% as of late March.

At the time, the GameStop chairman wrote a letter to Bed Bath's then CEO Mark Tritton saying he believed the home goods chain was struggling to reverse market share declines and navigate supply chain