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

A Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.

Retail traders on social media piled into the stock of Bed Bath & Beyond, encouraged by the news that Ryan Cohen placed a bet on the retailer.

There were multiple trading halts due to the volatility of Bed Bath & Beyond's stock price. The stock increased in price by 65%.

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According to a regulatory filing, Cohen's venture capital firm bought distant out-of-the-money call options on more than 1.6 million Bed Bath & Beyond shares.

When the underlying securities increase in price, investors make money from calls. Cohen is betting that Bed Bath & Beyond can rise as high as $80 a share because of the strike price. Monday's closing price was $16.

There are call options that Cohen bought.

Retail traders were interested in the new purchase. The ticker was the most popular on the chat room.

More than 160 million Bed Bath & Beyond shares changed hands on Tuesday, making it the busiest day in the company's history. The company has about 80 million shares.

Cohen's stake in Bed Bath & Beyond was disclosed in March. According to FactSet, his holdings stood at 11.82% at the end of March.

The chairman of GameStop wrote a letter to Mark Tritton, the CEO of Bed Bath, saying he believed the home goods chain was in trouble. He urged the retailer to sell its baby store.

Bed Bath said it struck a deal with the activist's firm to add three people to its board.

In June, Bed Bath replaced Tritton as CEO with Sue Gove. The company had another quarter of slow sales and losses.

Bed Bath is trying to turn around its business, but analysts don't think it will work. CNBC reported earlier this month that the company is shutting down one of its in-house brands.

Creating in-house brands for bedding and kitchen accessories was a core part of Tritton's plan to turn around his business. He stripped Bed Bath of items that customers wanted and invested a lot of money in things that didn't sell.