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Buy Call SBUX

January 19, 2023
Sell Existing Position: Sell your Starbucks (SBUX) January 85/107 Bull Call Spread for $18.75 or more.

With just one and a half days until expiration, it is time to move on from our SBUX position for a profit of approximately 330%. This was a great trade, and we may revisit SBUX again in the future, but time has finally run out.

To execute this trade you need to:
Sell to Close your SBUX January 85 Calls
Buy to Close your SBUX January 107 Calls

January 13, 2023
Roll Existing Position: Against SBUX January 85 Call, Buy Back the January 110 Call, and Sell the January 107 Call.

With just five trading days to go until our SBUX position expires, let’s get a touch “cute” by rolling our short call from the 110 strike, down to the 107 strike, in an attempt to capture more decay. (More on the risk/reward of this adjustment below).

To execute this trade you need to:
Buy to Close the January 110 Call
Sell to Open the January 107 Call

For example, you can buy back the January 110 call for $0.25, and sell the January 107 call for $0.90 (approximate values).

After this adjustment is made, the new net position will be:
Long January 85 Call
Short January 107 Call

The ideal landing spot for this new position is in the 107-108 range for SBUX next week, as we have dropped our cost basis on the position to $4 (approximately).

This adjustment will be a mistake if SBUX trades closer to our original 110 strike, as I will have lowered our profit potential.

September 14, 2022
Adjust Existing Position: Against your Starbucks (SBUX) January 85 Calls, Sell the January 110 Calls for $1.25 or more.

Starbucks (SBUX) is breaking out today after the company’s investor day. And while I think the stock looks terrific, unfortunately the market is a bit more suspect (to say the least). Because of the uncertainty in the overall market, let’s sell a far out-of-the-money call against our January 85 call to lower our premium at risk.

To execute this trade you need to:
Sell to Open the January 110 Call

After this new call sale, our trade will be the January 85/110 Bull Call Spread, that looks like this:

Long January 85 Call
Short January 110 Call

This call sale will drop our cost basis on our SBUX position to $5.30 (approximately).

This new call sale will be a mistake if SBUX rallies well above 110 by January expiration as we will have limited our upside potential. However, at that point our bull call spread would be at a profit of 375% (approximately).

Finally, even though we are selling an out-of-the-money call today, there is no question that this is still a bullish position, and we want SBUX stock to trade higher.

August 1, 2022
Sell Half of Position: Sell Half of your Starbucks (SBUX) January 85 Calls for $7.80 or more.

Two weeks ago, we “only” bought half of a Starbucks (SBUX) position as the market was still very suspect. Since then, the market has strengthened and SBUXhas steadily risen to a multi-month high.

Ahead of earnings tomorrow after the close, I am going to lock in a profit on half of my half position. I know that leaves us with a small remaining position, but in this slippery market, and ahead of earnings that could move the stock dramatically, I am going to lock in a profit of approximately 20% on a piece of this trade today.

To execute this trade you need to:
Sell to Close Half of your SBUX January 85 Calls

I will hold the balance of the trade through earnings tomorrow, and we will not sell further pieces of this trade at any point in the future.

July 22, 2022
Buy a Half Position: Buy the Starbucks (SBUX) January 85 Calls (exp. 1/20/2023) for $7 or less

The market continues to shape up despite non-stop negative headlines. This is a very encouraging sign. Also, many leading stocks have rebounded nicely from their June/July lows, and are seemingly on the verge of finally getting going again.

One of those stocks that has shaped up recently is Starbucks (SBUX) which bottomed in mid-June at 71 and has steadily risen to a high of 83.5. And into this stock run, yesterday afternoon a trader opened two call buys, one of which was “huge,” looking for the stock to continue to run in the months to come. Here are those trades:

Buyer of 100,000 Starbucks (SBUX) December 92.5 Calls for $2.96 – Stock at 83 (rolled up from December 85 calls)
Buyer of 5,000 Starbucks (SBUX) October 87.5 Calls for $3.30 – Stock at 83

The buy of the 100,000 December 92.5 calls was a premium outlay of approximately $30 million, while the October call buy was “only” $1.65 million. I really like this option activity in SBUX, as well as the way the stock is shaping up. However …

While I am encouraged by the market recently, I am not blind to the fact that nearly every rally this year has been a selling opportunity. Also, SBUX will report earnings on August 2nd, so there is risk in buying a position. Those two risks are why I am recommending buying a half position today.

To execute this trade you need to:
Buy to Open the SBUX January 85 Calls

The most you can lose on this trade is the premium paid, or $700 per call purchased.

As noted above, the risks I see in this trade are general market risk and the release of earnings in early August.

That being said, should the market and SBUX get in gear, I really like the risk/reward in a half position today.

Position (Original)SBUX January 85 Calls
Position StrategyBuy Call
Opened DateJuly 22, 2022
ExpirationJanuary 20, 2023
Net Price6.57
Jacob Mintz is a professional options trader and editor of Cabot Options Trader. Using his proprietary options scans, Jacob creates and manages positions in equities based on unusual option activity and risk/reward.