Starbucks Corporation (SBUX) Traders Keep Focus On Puts

Starbucks Corporation puts were bought and sold to open on Friday

by Digital Content Group

Published on Nov 3, 2014 at 10:15 AM
Updated on Jun 24, 2020 at 10:16 AM

Starbucks Corporation (NASDAQ:SBUX) dropped 2.3% on Friday in the wake of a poorly received quarterly earnings report and subsequent round of price-target cuts. These developments prompted traders to rush the java giant's options pits, where total volume swelled to five times the daily average.

SBUX's most active option was the out-of-the-money January 2015 72.50-strike put, which saw 5,107 contracts change hands. Activity was split fairly evenly between the bid and ask prices, and open interest spiked over the weekend, suggesting positions were initiated by sellers and buyers, respectively. Breaking things down further, Friday's put writers anticipate SBUX will retain its perch atop $72.50 through January options expiration, while the buyers expect the shares to descend below the strike within the same time frame.

This morning, Starbucks Corporation (NASDAQ:SBUX) is 0.5% higher at $75.91, but remains 3.2% south of breakeven on a year-to-date basis, and has underperformed the broader S&P 500 Index (SPX) over the last three months. Not surprisingly, short-term traders have displayed a marked preference for puts over calls recently, as was evidenced on Friday. Specifically, SBUX's Schaeffer's put/call open interest ratio (SOIR) of 1.12 ranks in the put-skewed 78th percentile of its annual range.


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