Starbucks draws short-term call buyers
Traders are looking for Starbucks to rally this week.
optionMONSTER's monitoring program shows that 5,500 Weekly 56 calls expiring this Friday were purchased for $0.53 to $0.75 today. Volume surpassed open interest of 3,496 contracts, an indication that new money was put to work.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)
SBUX is up 0.66 percent to $56.39 in morning trading but is down 1 percent in the last week. The coffee giant is expected to report earnings after the close on Nov. 3.
Overall option volume is average in SBUX so far today, but calls outnumber puts by a bullish 19-to-1 ratio.
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