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
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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.


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