Starbucks Corporation (SBUX) is the premier roaster, marketer and retailer of specialty coffee in the world operating in 65 countries purchasing and roasting high-quality coffee, handcrafted coffee, tea and other beverages. The stock is currently trading around $56.65 at the upper end of its 52 week range of $35.38-$57.00. The stock has been out performing the market this year rallying 38.15% year to date. SBUX is scheduled to report earnings after the closing bell today, and the stock is down $0.5 or 0.08% on the session ahead of the close.
Over the past 12 quarters SBUX has rallied on earnings day 9 times with an average move of 4.52%. The stock appears extremely bullish on a chart going into the release having traded above the Ichimoku Cloud since March on the daily bars. Over the past 12 quarters SBUX has rallied from earnings to the nearest options expiration 9 times with an average move of 4.44%. The stock looks as if it could rip to the upside following the recent bullish trend. Investors are expecting to see positive responses from customers due to the Starbucks’ Mobile Order & Pay where a customer can order before arriving at a Starbucks store. With an extremely bullish technical analysis and spectacular earnings performance in the past it is hard to justify anything, but a long position on SBUX.
The options market is currently implying a move of around $2.5 or 4.4% in SBUX by this Friday’s close giving us targets of $54.15 and $59.15.
Trade: Buy this week’s 58.5-59.5 Vertical Call spread for $0.21
Risk: $21 per lot
Reward: $79 per lot
Break Even: $58.71