Bulls take swig of $SBUX gains

Option traders collected hefty profits in Starbucks today.

On Jan. 14, Investitute’s market scanners identified the purchase of 10,000 February $60 calls for $4.75 as part of a bullish roll with shares at $64.01. This was clearly a new position, as open interest in the strike was only 1,408 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for $9.20 today, twice their purchase price. The stock rose 8.08% 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 reached $69.31 this morning, near the all-time high of $69.49 it reached yesterday, before pulling back with the rest of the market to finish the session down 0.04% to $68.11. The coffee giant surpassed earnings and sales expectations on Jan. 24.