Starbucks Investors, Speculators Load on $100 Call Options After CEO Change
$Starbucks (SBUX.US)$ call options that give the holders the right to buy the shares at $100 attracted the heaviest volume among contracts tied to the stock after the company hired $Chipotle Mexican Grill (CMG.US)$ CEO Brian Niccol to lead the world's largest coffee chain.
The surge in call options trading came as Starbucks shares jumped 22% to $93.94 at 2:57 p.m. in New York Tuesday. The CEO change revived investor optimism for a stock that's been hovering near a one-year low since early May.
Almost 92,000 of the $100 calls changed hands across 16 expiration dates stretching through Dec. 18, 2026, with just about an hour left before the market closes, data compiled by moomoo showed. That almost three times the combined open interest of those contracts with that strike price.
Activist investor Elliott Investment Management, which has taken a stake in Starbucks and has been engaging with the company's board to resolve issues that it says have dragged its valuation lower, welcomed Niccol's appointment as CEO.
"We view today's announcement as a transformational step forward for the company," Elliott said in a press release after Niccol's appointment. "We look forward to continuing our engagement with the Board as it works toward the realization of Starbucks' full potential."
Sentiment is turning in favor of Starbucks, which has missed revenue estimates in the past three quarters amid declining same-store sales and weakening traffic.
Starbucks shares rallied Tuesday amid speculation Niccol will be able to turn things around for the coffee chain just as he did at Chipotle. Nancy Tengler, chief executive of Laffer Tengler Investments. which owns Starbucks and Chipotle shares, was optimistic that "Niccol will fix Starbucks," according to a MarketWatch report.
Niccol led Chipotle at a time when other restaurant chains were struggling to keep customers coming in. He was brought into the company as the restaurant chain was facing food-safety issues that landed Chipotle at the crosshairs of regulators. During his years at the helm, the restaurant chain reported strong sales growth that outpaced other chains, including Starbucks, the Wall Street Journal reported.
The investor enthusiasm can also be gleaned from the capital trend data. Fund inflows into the stock outpaced outflows by $152.7 million, data compiled by moomoo showed.
But technical indicators are flashing early warning signals. Eleven of the 15 gauges tracked by moomoo are signaling that the stock could be overbought after Tuesday's 22% rally, and the trend could turn bearish.
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Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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Former editor at Bloomberg, then Lazard Asset Management. Posts aren’t investment advice. Views are just mine.
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