January 19, 2023
Sell Existing Position: Sell your Starbucks (SBUX) January 85 Calls for $19 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 190%. 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
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 Strategy | Buy Call |
| Opened Date | July 22, 2022 |
| Expiration | January 20, 2023 |
| Net Price | 6.57 |
| Strike | 85 |