Dan Nathan Sees Unusual Options Activity In Starbucks

On CNBC's Options Action, Dan Nathan spoke about unusually high bearish options activity in Starbucks Corporation SBUX. He noticed that put options volume was two times higher than the average daily volume and the most of the volume came in one trade.

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When the stock was trading at $55.70, there was a buyer of 6,500 contracts of the July 22 expiration, 53/50.50 put spread for $0.46. The trade breaks even at $52.54 and it can maximally make $2.04. The company is going to report earnings on July 21 and Nathan thinks the trade could be a protection for a long position. He believes buying puts would be a better choice than buying the put spread, because there's a risk that the stock could revisit the August low.