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Option Brief: Starbucks Corporation (NASDAQ:SBUX) has seen a healthy number of April 77.50 puts change hands in its options pits today, and it appears the majority of speculators placing bets at this strike are bracing for technical turbulence in the short term.
At last check, around 2,400 of these back-month options had crossed the tape -- nearly two-thirds of which went off at the ask price. Plus, implied volatility at this strike has ticked higher, and volume has surpassed open interest. Collectively, this data suggests long put positions have been initiated here.
With SBUX shares currently trading at $74.35 -- a 1.7% drop from yesterday's close -- the April 77.50 puts are in the money. However, in order for today's bearish bettors to churn a profit, the stock has to drop below the breakeven price of $74.17 (strike price less the volume-weighted average price of $3.33) by the close on Thursday, April 17, when the options expire.
After studying Starbucks Corporation's (NASDAQ:SBUX) technical and sentiment backdrops, a plunge below the breakeven mark seems very likely. To be specific, the $75-$76 area emerged as a layer of resistance in mid-January, rejecting the shares' advances several times since. Today, the stock again attempted to burst through the barrier, making it as far as $76.42 before retreating to its current perch.