Q2 STOCKS TO BUY

Starbucks Option Traders Locked in a 244% Profit in Under 3 Months

Shorts were in covering mode upon our recommendation

Managing Editor
Aug 22, 2019 at 3:38 PM
facebook X logo linkedin


Subscribers to Schaeffer's PowerTrend options recommendation service just scored a 244% profit on the Starbucks Corporation (NASDAQ:SBUX) August 75 call. Below, we'll explain why we expected an outsized move for SBUX, and how the winning options trade unfolded with our two partial closes.

When we recommended our SBUX call on Tuesday, May 21, the stock was trending higher on the charts. The coffee chain was consolidating and had briefly pulled back to the $75 floor of support, making it an opportune time to bet on the equity's next surge higher.

Also acting as support was the rising 40-day moving average, which in the past had performed as resistance toward the shares. The company was also eyeing a potentially volatile earnings report in late July, and short sellers were in covering mode. Specifically, at the stock's average pace of trading, and with 22.5 million shares sold short, it would take three days for shorts to buy back their bearish bets.

Short-term traders were also unusually put-skewed at the time of our recommendation. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) came in at 1.28, which ranked in a lofty annual percentile. Plus, Starbucks stock was overdue for upgrades, with 12 of 23 analysts sporting a "hold" recommendation.

Following our recommendation in late May, SBUX continued its steady climb higher on the charts. This allowed traders to quickly mark a 50% partial closeout on Wednesday, July 3, locking in an initial 153% profit. The shares then saw a post-earning bull gap on July 25, which, combined with a slew of bull notes from analysts, sent the shares soaring. On Friday, Aug. 16, traders were able close the final 50% of our recommended call with a 334% profit, locking in a 244% net profit in just under three months.

Daily SBUX with Entry and Exit Dates

 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

🚀 One Stock Pick Could Change Everything in 2025
What if one stock pick could define your success next year? Get 10 expert-vetted stocks set for 2025—plus 5 bonus picks to watch now. Get the Report →

🆕 New Options Need New Trading Strategies
Zero-DTE options are the newest (and hottest) options to trade.  Professional traders have rushed into the market and are making a mint.  Don’t get left behind - learn all about these options, how to trade them, market setups to profit from, plus much more. Download now →

👀 Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter