Dan Deming's Starbucks Options Trade

Speaking on Bloomberg Markets, Dan Deming of KKM Financial suggested an options strategy in Starbucks Corporation SBUX ahead of earnings report, which is scheduled on Thursday.

Deming noticed that implied volatility in weekly calls is elevated and he wants to sell the April 61.50 call and buy the May 61.50 call for a total cost of $0.16. He explained that if the stock stays at its current level or trades lower, he can capture the premium decay in the April 61.50 call. If the stock rallies, Deming is going to cover the April 61.50 call and he is going to try to participate in the potential upside with the longer dated call option.