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Dan Nathan's Starbucks Trade

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On CNBC's "Options Action", Dan Nathan spoke about a bullish options trade in Starbucks Corporation (NASDAQ: SBUX) ahead of earnings.

The company is going to report earnings Thursday and the options market is implying a 4 percent move in either direction. That has been an average over the last four quarters. Nathan believes the stock could move to $60 if it reports a good earnings report, but he's afraid it could drop to $51, in case it guides down again. To make a bullish bet he wants to buy the December 55/60 call spread for $1.30.

The trade breaks even at $56.30 or 2.59 percent above the current market price. If the stock jumps 9.33 percent or more at the December expiration, the trade is going to reach its maximal maximal profit of $3.70.

 

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Posted-In: CNBC Dan Nathan Options ActionOptions Markets Media Trading Ideas