Starbucks Stock Stumbles After Employees Get a Raise

The equity is up over 16% year-over-year, however

Digital Content Manager
Nov 19, 2020 at 11:22 AM
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The shares of Starbucks Corporation (NASDAQ:SBUX) are down 0.3% at $97.58 at last check, after the coffee chain said it would hike pay for baristas, shift supervisors and attendants by at least 10% as soon as Dec. 14. The company will also increase starting wages by 5%, in an effort to help attract and retain new employees moving forward.

On the charts, the security just came shy of a new record, after it surged to a Nov. 18, annual high of $99.32. And while Starbucks stock is now cooling off slightly, it has nearly doubled off its March 18, two-year low of $50.02, with support from the 60-day moving average over the last few months. Longer term, SBUX sports a 16.6% year-over-year lead. 

Analysts are evenly split toward the security, with 11 of the 22 in coverage sporting a "buy" or better rating, and the remaining 11 carrying a tepid "hold." Meanwhile, the 12-month consensus target price of $93.95 is a 3.7% discount to the stock's current perch.

The options pits are decidedly optimistic, however, with calls popular. This is per the security's 10-day call/put volume ratio of 3.83 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 82% of readings from the past year. In simpler terms, calls are being picked up at a quicker-than-usual clip. 

It seems now could be an opportune time to take advantage of Starbucks stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 25% sits in the extremely low 10th percentile of its annual range. This mean SBUX currently sports attractively priced premiums.

 

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