Starbucks shares are trading at all-time highs ahead of the company's fiscal 2015 third quarter earnings report Thursday after the closing bell. But some traders are betting that the hot stock could start to cool down soon.
On Wednesday, when options volume ran more than 1.5 times its daily average and bearish activity outpaced bullish, traders were placing bets that Starbucks shares could fall more than 7 percent in the next month.
These traders bought the August 53.50-strike puts for an average price of 75 cents. Since buying a put allows a trader to sell a stock at a set price at a given time, this trade is profitable if Starbucks shares fall below $52.75 by August expiration. The stock was trading at $56.70 Thursday morning.