Starbucks (SBUX) Option Players Predict All-Time Highs

Starbucks Corporation (SBUX) traders gamble on new all-time high

by Griffin Kruse

Published on Apr 13, 2015 at 2:59 PM
Updated on Jun 24, 2020 at 12:32 PM

Starbucks Corporation (NASDAQ:SBUX) is 0.8% higher at $48.57. Today's gain is more of the same for the shares of SBUX, which are up 18.4% on a year-over-year basis. Accordingly, SBUX's short-term calls are hot, with some speculators betting on more upside before the week's end.

SBUX calls are moving at two times their average intraday clip, and are outpacing puts by about a 4-to-1 ratio. The day's most active contract by a mile is the April 49.50 call, where possible buy-to-open activity has been uncovered. By purchasing this call, traders expect the shares of SBUX to push their way above the strike price by the close this Friday, April 17, when the contract expires. It is worth noting that SBUX's all-time high is $49.60, attained on March 19, and the buyers' at-expiration breakeven is $49.61 (strike plus volume-weighted average price of $0.11).

Despite SBUX's impressive technical performance, its average 12-month price target of $49.48 is only a 1.9% premium to current trading levels -- and in line with the strike price of today's most popular call contract. Should the stock extend its uptrend, a round of analyst price-target hikes could provide tailwinds for the shares.

Meanwhile, today's penchant for calls mirrors recent activity in the options pits. Over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.39 Starbucks Corporation (NASDAQ:SBUX) calls have been bought to open for every put, which is a higher ratio than 78% of all similar readings taken over the past year. Traders are paying relatively inflated prices for their near-term bets on the stock, as its Schaeffer's Volatility Index (SVI) of 24% stands in the 57th percentile of its annual range.

Daily Chart of SBUX Since April 2014

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