Stocks quoted in this article:
Option Brief: Starbucks Corporation (NASDAQ:SBUX) issued its fiscal fourth-quarter earnings statement last night, but for options traders, the excitement is just beginning. Speculators have swarmed SBUX in the wake of this news, bringing total option volume to more than 56,000 contracts, or almost quadruple the intraday volume seen during an average session.
Calls are outpacing puts by a relatively healthy margin. Currently, 34,000 calls are on the tape (four times the typical level), versus 20,000 puts (more than five times the norm). Leading up to the company's earnings results, demand was more skewed toward the call side. Over the course of the last 10 days, traders had purchased to open 335 calls for every 100 puts at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).
As is typically seen after a known event passes, implied volatility (IV) is plunging. In fact, Starbucks' 30-day, at-the-money IV measure has dropped 9.8 percentage points, or 31.5%, to 21.5%. This "volatility crush" phenomenon tends to lower options premiums across the board.
Most active today is the near-the-money November 80 call, which is seeing a mixture of buying and selling activity. Also receiving notable attention is the November 77.50 put, as some investors are selling these puts to open as a short-term bet that SBUX shares will hover north of the 77.50 strike through November expiration in two-plus weeks. The put sellers might also have an ulterior motive in mind, and are willing to buy the shares on a pullback below this level.
On the charts, Starbucks Corporation (NASDAQ:SBUX) touched another new all-time high of $81.35 today, but has pared most of its earlier gains to trade at $80.87, just above breakeven. As noted, SBUX took its turn in the earnings confessional last night, topping bottom-line estimates and matching revenue expectations.