Starbucks Gets Into Holiday Mood Before Earnings

Starbucks reports earnings after the close tonight

Managing Editor
Nov 1, 2018 at 10:07 AM
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The shares of Starbucks Corporation (NASDAQ:SBUX) are down 0.1% to trade at $58.23 this morning. The coffee giant just announced the release of its red-and-green holiday cups, but more importantly, will report fiscal fourth-quarter earnings after the close tonight. 

Over the last eight quarters, Trade-Alert data shows SBUX making an average move of 3.3% in the trading session after its earnings are released, regardless of direction. That includes the equity's 2.1% jump last November after its quarterly figures hit Wall Street. This time around, the options market is pricing in a 6.7% post-earnings move, based on the implied earnings deviation.

On the charts, Starbucks stock has rallied 23% since its late-June lows near $47, thanks to some well-received corporate restructuring. During this time frame, the shares have relied on support from their 40-day moving average. Longer term, the equity sits just above its year-to-date breakeven point. 

Shorts have been piling on in droves lately. Short interest more than tripled in the most recent reporting period to 87.30 million shares, the most since September 2009. This represents a healthy 6.7% of SBUX's total available float, and nearly eight times the average daily trading volume.

In the options pits, short-term traders are more skewed than usual toward Starbucks puts over calls. The stock's Schaeffer's put/call open interest ratio (SOIR) stands at a steep 3.41 which arrives in the 97th percentile of its annual range.

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