Green Mountain Coffee Roasters Eyeing All-Time Highs

Shares of Green Mountain Coffee Roasters (NASDAQ: GMCR) are trading lower on the session by 1.18%, trading at $108.40. The stock has been moving largely higher, well, ever since its IPO; more recently, shares began to gain momentum to the upside in 2009 and have been skyrocketing ever since.

It seems that the trend is indeed your friend when it comes to coffee stocks. Peet's Coffee & Tea (NASDAQ: PEET) and Coffee Holding Co. (NASDAQ: JVA) have both shown similar, nearly parabolic, trading patterns.

Green Mountain Coffee Roasters has actually been a laggard compared to the other stocks mentioned. However, shares are now catching up and appear ready to be the first of the three to rise above their August highs. GMCR hit a high of $111.42 in August, breeched that level a few days ago (touching $114.00), and is now consolidating above the 50-day moving average.

You can play the name in a few ways, but ones with clearly defined risk metrics and max losses should be preferred given the stock's volatile nature. Using options is the preferred method as it also negates the gap down risk, which you still have with stop losses.

Those looking for a short-term pop can buy the $115/125/140 modified 1x2 for $2.73. This involves buying the $115 strike and selling both the $125 and $140 strikes. Max gain is $7.27, +266%; losses are not taken until shares trade above $145, some 33% higher in only eight weeks.

Note that Green Mountain Coffee Roasters has 13.10% short interest.

Green Mountain Coffee Roasters, Inc. is engaged in the specialty coffee and coffee maker businesses. The company operates in two business segments: the Specialty Coffee business unit and the Keurig business unit.