Coffee chain Starbucks (SBUX) is down 17% over the past year, as same-store sales in the U.S. have considerably slowed. One company expects shares to trend higher over the next month.
That’s based on the July 12 $82 calls. With 30 days until expiration, 8,367 contracts traded compared to a prior open interest of 129, for a 65-fold rise in volume on the trade. The buyer of the calls paid $2.05 to make the bullish bet.
Starbucks shares recently traded for about $81.50, making this an at-the-money trade. Shares are closer to their 52-week low of $71.80 than their 52-week high of $107.66.
Starbucks hit its 52-week low in early April, and has been trending higher since.
The company saw earnings slide 15% over the last year, and revenues dropped by 2%. A potential turnaround play is underway to improve same-store sales, and continue to expand internationally.
Action to take: With Starbucks now in an uptrend, today’s buyers can likely see low-double-digit returns in the coming months. Plus, shares now pay a 2.8% dividend.
For traders, a continued rally higher from here are why the July 12 $82 calls have become popular.
Based on their current price, they could see high-double-digit returns, or even provide investors with a 100% gain or more, depending on how much shares continue to rally 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.