$SBUX bulls score at highs

Option traders were served big gains in Starbucks (SBUX) as shares percolated to new highs today.

Back on Oct. 5, Market Rebellion’s Unusual Options Activity service showed that 4,100 June $90 calls were purchased for $8.05 to $8.64 with shares at $88.51, above the previous open interest of just 2,118 contracts.

Those calls sold for $23.35 today, at least 2.5 times their purchase prices. The stock rose 27.68% 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 $113.15, up 1.92%. The coffee giant was initiated at Atlantic Equities this morning with an Overweight weighting and $128 price target this morning.