Any casual market observer has probably been made aware that Best Buy (BBY) reported their earnings and the stock is reacting negatively this morning. As I type this at my breakfast table in suburban Chicago the stock is down 2.37 to 25.70 in pre-market trading. When I see this sort of price change off an earnings report I immediately do one thing – check the next expiring option pricing from the night before. I like to see if the market got the price change right and it this case (at least as far as the magnitude of the price change goes). The way to go about this is to check the prices for the next expiring straddle. For BBY this would have been the Dec 28 Straddle that expires this Friday as the stock closed at 28.07 last night. The BBY Dec 28 Call was priced at 1.18 and the BBY Dec 28 Put closed at 1.11 for a straddle cost of 2.29 – pretty darn close to how much BBY is down on the day at this moment. Of course prices change so we’ll see how well the price move in BBY was estimated by the end of the day.