Upside calls in Starbucks lit up our screens yesterday as traders looked for a jolt higher.
The option action wasn’t screaming, but it was definitely bullish as the April 49 calls met with buyers for $1.29. Traders then targeted the April 52.50 calls for $0.23 and $0.25, according to OptionMonster’s real-time tracking systems.
Calls lock in the price investors must pay to buy shares. That can provide major leverage to the stock price going up, but they can also expire worthless if it doesn’t move in the right direction.
Starbucks shares rose 2.4 percent to $49.49 yesterday, and those calls were also up by the end of the session. It’s been advancing steadily since the summer and is now pushing to new all-time highs.
Almost 7,000 calls traded against 4,000 puts yesterday. So I guess I am not the only coffee freak on the planet!
—Najarian has no positions in SBUX.
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