I can say, with a probability approaching 100%, that SBUX’s new “Cloud Macchiato” will never (with my knowledge) cross my lips. That just means there will be more for Ariana Venti Grande. With coffee (/KC) futures on a long losing streak, SBUX has been reaping the rewards of cheap raw materials. And as the “cloud” part of the new drink is made with egg whites, low cackleberry prices are helping, too. The result is that SBUX is trading near an all-time-high, which it set last week. Wall St. loves its digital efforts and continued strong sales. But, ever the contrarian, I have to ask how much higher can it go? Earnings are coming upon April 25, and its IV rank is 16%. That’s debit spread territory. If you’re bullish on SBUX, the long put vertical that’s short the 70 put and long the 75 put in the April expiration with 43 DTE is a bearish strategy that has a 62% prob of making 50% of its max profit before expiration and that generates $.86 of positive daily theta.
Opened 19/03/06 for $2.68 debit
Closed 19/03/08 for $3.38 credit