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Todd Gordon's Starbucks Trade

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On CNBC's Trading Nation, Todd Gordon of TradingAnalysis.com spoke about Starbucks Corporation (NASDAQ: SBUX) and he suggested a bearish options strategy in the name ahead of earnings.

He explained that the stock has been under performing for months and it is trading now close to its key support level. Gordon thinks that it's going to drop below the support as we are heading into earnings. He added that implied volatility is currently high because of earnings and he wants to sell a call spread to make a bearish bet.

Specifically, Gordon wants to sell the November 52.50 call and buy the November 55 call for a total credit of $1. If the stock stays below $52.50, he is going to make his maximal profit of $1. If it trades above $53.50, he is going to start to lose money and his maximal loss is $1.50.

Posted-In: CNBC Todd Gordon Trading Nation TradingAnalysis.comOptions Markets Media

 

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