Coffee chain Starbucks (SBUX) is down nearly 30% over the past year, and shares have been trending down since reporting earnings. One trader expects a rebound in the coming weeks.
That’s based on the June 14 $81 calls. With 24 days until expiration, 2,684 contracts traded compared to a prior open interest of 110 contracts, for a 24-fold rise in volume on the trade. The buyer of the calls paid $0.63 to make the bullish bet.
Starbucks shares recently traded for about $78, so shares would need to rise by $3, or just under 4%, for the options to move in-the-money.
Shares are close to the 52-week low of $71.80.
Operationally, Starbucks has struggled in the past year. Earnings have dropped by 15%, and revenues are down by 2%. Plus, same-store sales dropped 10% in the U.S., the company’s key market, in the last year.
Action to take: While shares sold off heavily after earnings, they’re starting to show signs of trending higher and closing up the gap lower they had. That suggests shares could see a continued resurgence in the coming months.
At current prices, shares pay a 3% dividend. Starbucks has a history of raising its payout over time.
For traders, the June $81 calls could see high double-digit returns on a continued rally higher for Starbucks shares in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.