Bulls take a swig of $SBUX gains

Option traders collected caffeinated profits in Starbucks (SBUX) today.

On May 6, Market Rebellion’s Unusual Activity scanners showed that 3,000 Weekly $76 calls expiring today, May 8 were purchased for $0.18 to $0.37 with shares at $74.08. These were clearly new positions, as open interest in that contract was just 1,037 before the trade occurred.

Those calls sold for $1.95 today, at least 5 times their purchase prices. The stock rose 5.17% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

SBUX closed the day at $77.87 today, up 2.46% near its intraday highs. The coffee giant expects to have more than 85% of its company-operated U.S. stores by tomorrow, May 9.