Starbucks Stock Takes Breather Amid Coronavirus Concerns

Starbucks is temporarily closing its chains in Wuhan, China

by Patrick Martin

Published on Jan 27, 2020 at 9:39 AM

The shares of Starbucks Corporation (NASDAQ:SBUX) are down 3.9% to trade at $88.38 this morning. The coffee chain joined restaurant stocks Yum China (YUMC) and McDonald's (MCD) in closing its stores in Wuhan, China in fear of the rapidly spreading coronavirus. 

Even with today's pullback looming, Starbucks stock looks to be hanging on to its newly-established year-to-date breakeven point. Plus, the shares also have support in place at their 40-day moving average, a trendline not breached on a closing basis since late November. Year-over-year, SBUX is still up roughly 40%. 

Analysts are split down the middle over what to do with Starbucks. While there are no "sells" on the books, 11 in coverage maintain "hold" ratings, compared to 10 "buy" or better stances. 

In the options pits, traders are much more focused on calls. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows unusual interest in long Starbucks call options. The equity's 10-day call/put volume ratio is 3.05, and ranks in the 78th annual percentile.

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.85 sits in the low 14th percentile of its annual range. This means short-term speculators are more call-heavy than usual.

Even  further, SBUX has been more volatile than expected during the past 12 months. This is based on its Schaeffer's Volatility Scorecard (SVS) of 87 (out of 100.)


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