Starbucks Stock Could Reward Options Traders Again

A round of bull notes could put SBUX on track to break out to new highs

Sep 4, 2019 at 1:34 PM
facebook twitter linkedin

Starbucks Corporation (NASDAQ:SBUX) surged nearly 9% after the coffee concern's impressive turn in the earnings confessional in late July -- hitting an all-time peak of $99.72 along the way. The shares have since consolidated atop their rising 20-day moving average and 50% year-to-date return.

sbux daily chart aug 30

Analyst sentiment is overly bearish on the outperformer, and a round of bull notes could put SBUX on track to break out to new highs. Fourteen of 23 covering brokerages maintain a tepid "hold" recommendation on the shares, and the average 12-month price target of $95.52 is perched below current levels.

The stock has been a prime target for premium buyers over the last year, too, per its Schaeffer's Volatility Scorecard (SVS) reading of 94, out of a possible 100. In other words, SBUX has tended to make outsized moves in the past 12 months, relative to what the options market priced in.

Our recommended call has a leverage ratio of 7.6, and will hit its recommended target on a 12.9% pop in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this SBUX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Grab your FREE Eternal Contrarian report!


Special Offers from Schaeffer's Trading Partners