Starbucks (SBUX) Offering Possible 13.9% Return Over the Next 23 Calendar Days

Starbucks's most recent trend suggests a bullish bias. One trading opportunity on Starbucks is a Bull Put Spread using a strike $92.50 short put and a strike $87.50 long put offers a potential 13.9% return on risk over the next 23 calendar days. Maximum profit would be generated if the Bull Put Spread were to expire worthless, which would occur if the stock were above $92.50 by expiration. The full premium credit of $0.61 would be kept by the premium seller. The risk of $4.39 would be incurred if the stock dropped below the $87.50 long put strike price.

The 5-day moving average is moving down which suggests that the short-term momentum for Starbucks is bearish and the probability of a decline in share price is higher if the stock starts trending.

The 20-day moving average is moving up which suggests that the medium-term momentum for Starbucks is bullish.

The RSI indicator is at 72.5 level which suggests that the stock is neither overbought nor oversold at this time.

To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here


LATEST NEWS for Starbucks

A Lesson From Starbucks
Mon, 23 Nov 2020 17:50:10 +0000
Gourmet beverages might belong to the category of cheapest luxury goods, but these manufacturers suffered this year along with the overall economy. Even leaders such as Starbucks (NASDAQ: SBUX) and PepsiCo (NASDAQ: PEP) saw significant sales declines as soon as lockdowns took place, though their equity has since rebounded for the most part. Starbucks specifically has taken coffee to the next level with 32,000 cafes across the globe. So what did Starbucks do that helped it stay afloat?The effect of a global pandemicStarbucks revealed COVID-19 made it lose $1.2 billion in sales as an impact of limited operations, reduced hours as well as closures. This year, the US coffee chain saw everything but its typical quarter where sales and comps both score notch high growth numbers as they bottomed out at as low as a 65% decline during the company's third quarter.Competitors For now, the coffee giant does not really have a real competitor be threatened by. Dunkin' Brands (NASDAQ: DNKN) stores and McDonald's (NYSE: MCD) do both sell coffee. Moreover, McDonalds announced last week it plans to spend approximately $381.6 million in the Chinese coffee market over the next three years via its coffee brand McCafe. By 2023, 4,000 McCafe outlets should be up and running on the Chinese mainland so coffee wars might intensify in the near future.Although the controversial Luckin Coffee Inc (OTC: LKNCY) did shake its ground in China, there isn't another retail chain anywhere the size of Starbucks that only focuses on beverages. Both Dunkin' and McDonald's trail behind Starbucks in sales and Luckin is still grappling with a fraud controversy despite its stock surge.The right “recipe”Since COVID-19 started its relentless march across the globe, Starbucks aggressively defended its top position by opening more drive-thrus, giving salespeople point-of-sale devices for quick transactions, and focusing on suburban store openings. Last week, it announced it is raising wages for its baristas of at least 10% starting December 14th. Starbucks is already known for giving its workers more generous benefits and pay compared to its peers in the restaurant industry.The secret weapon – the mobile appIn September, the coffee giant launched a new loyalty program in September that offers an enhanced shopping experience as well as rewards for members. Those same members that account for a large chunk of sales.It's been five years since Starbucks rolled out the ability to place orders using its mobile app. Customers are loving this feature as it is as good as it gets to benefit from the customized Starbucks experience. The company rolled out mobile payments already in 2011, letting customers link a Starbucks card to the app to pay for their orders. This ended up being a brilliant strategy that more than paid off during the pandemic which demanded a ‘contactless' service. Moreover, it made Starbucks's app the most popular mobile payment processor as it's sometimes even more used than Apple Inc. (NASDAQ: AAPL) ApplePay, according to e-Marketer. Starbucks revealed that almost one quarter of total orders in its stores come from the mobile app.Results Despite the difficult environment, the coffee giant managed to exceed expectations with its last reported quarter largely because of a decision it made years ago. Analysts had expected Starbucks to earn $6.06 billion, but despite the pandemic having reduced its customer traffic, revenue for the quarter ended up being $6.2 billion. Adjusted EPS of 51 cents also exceeded Bloomberg's estimate of 31 cents.While the pandemic is still raging over many parts of the globe, Starbucks has see a 9% revenue drop in the fourth quarter ended on September 30th. Still, it's been improving quarter to quarter while topping estimates every time.Due to the global health and consequent economic crisis, Starbucks has seen its revenues fall 11% YoY to $23.5 billion during FY 2020 that ended in September. But, it managed to beat earnings expectations with EPS of $0.79 while reporting a cash inflow of $1.6 billion from operating activities.FY 2021 Starbucks is forecasting double-digit growth in fiscal 2021 as it aims to regain everything it lost in 2020 while moving forward. Earnings were already positive in the fourth quarter and sales are already positive in its second fastest-growing market- China. Trefis expects Starbucks' revenues to recover after this unprecedented year and rise by 21%, in the range between $28 billion to $29 billion. Its net income is likely to follow the positive trend of recovery as it is estimated at $3.7 billion, with the expected EPS of $3.17.Outlook Even the business that were able to stay open during the pandemic felt the pain of those that were forced to close their doors. Everyone who survived had to quickly figure out how to make drastic changes to the way they served their customers while protecting their employees from the virus. Remarkably, Starbucks managed to keep going after a very harsh reality check. Five years after it launched its mobile app, it ended up being ‘saved' by this feature. This story only shows that being focused at constantly improving the customer experience never gets old. The lesson is simple: what was good for the customer ended up being very good for the business.This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.comThe post A Lesson From Starbucks appeared first on IAM Newswire.See more from Benzinga * Click here for options trades from Benzinga * Last Week's IPO Recap * IPO News: Airbnb Finally Files To Go Public(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

1 Reason Starbucks Is Opening More Stores Internationally Than Domestically
Sun, 22 Nov 2020 17:40:00 +0000
The company is expecting to add stores at a slower pace next year while accelerating international growth.

How is the fast food industry surviving coronavirus?
Sun, 22 Nov 2020 15:04:22 +0000
Quick, convenient, low-contact meals from fast-food chains have helped many people through the pandemic.

Better Buy: Starbucks vs. PepsiCo
Sat, 21 Nov 2020 13:23:00 +0000
Industry leaders such as Starbucks (NASDAQ: SBUX) and PepsiCo (NASDAQ: PEP) had huge sales declines at the beginning of lockdowns, but they're crawling out from under the mess. Starbucks has taken coffee to the next level with its more than 32,000 global cafes. Sales and comps both score notch high growth numbers in a typical quarter, but they bottomed out at as low as a 65% decline during the company's third quarter.

Slowing Retail Sales Could Lead to a Channel
Fri, 20 Nov 2020 21:51:55 +0000
As we mentioned last week, the market is performing well. There are even signs that the rally is broad enough to avoid a short-term decline. However, because the underlying fundamentals are still weak — and taking into account recent news about slowing retail sales — we should set expectations for a flat channel after this week’s breakout.
Source: jayk67 / Shutterstock.com

Our stance may sound a little odd considering the stellar performance in the major indexes over the last few days as investors have rejoiced at the good news about Covid-19 vaccines.
However, although we are excited about progress toward an end to the pandemic, retail sales numbers this week show that some of the support for the market is eroding in other areas.InvestorPlace – Stock Market News, Stock Advice & Trading Tips
Retail Sales
We had a few big retail reports this week, including Walmart (NYSE:WMT) and Home Depot (NYSE:HD) on Tuesday. Both companies exceeded expectations, but warned about future demand. The U.S. Census Bureau also reported month-over-month retail spending for October on Tuesday, which missed growth estimates by 40%.
As you can see in the following chart, retail spending took a big hit when the Covid-19 pandemic hit the U.S. in the first and second quarters this year. On the surface, the chart seems to imply that consumers have made up the losses and spending growth has continued, but that is only half true.
Source: Advance Real Retail and Food Service Sales — Chart Source: Federal Reserve Economic Data (FRED)

Since spending started to rise again in May, the U.S. economy is still down $51.3 billion in spending that would have otherwise happened.

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The pandemic created a deficit of a little over $75 billion, to put this in perspective.
During the 2008-2009 recession, the deficit in consumer spending grew to nearly 10 times that size, so we aren’t worried about a collapse of the economy at this point, but the slowing rate of growth means significant gains in the market are less likely in the short term.
We still plan to keep some exposure to the retail sector, but we will continue to focus on companies that are likely to do well if lockdowns and other restrictions become common. Those pandemic risks are some of the reasons we are still very bullish on our positions in Chegg (NYSE:CHGG), Logitech (NASDAQ:LOGI) and Starbucks (NASDAQ:SBUX).
Stimulus
The drama following the vote has distracted investors from the 900-pound gorilla in the room — another round of stimulus. Both Republicans and Democrats seem to favor a stimulus bill, but the amounts range from $500 billion to $2.2 trillion.
With many unemployment benefits due to expire next month, this could be the issue that makes or breaks the market this year.
At this point, we feel that some stimulus package passing by January is very likely. However, we are concerned that the amount of stimulus that passes both houses of Congress will miss the amount the market has “priced in.” We agree with Deutsche Bank analysts that the baseline assumption is probably in the $750 billion range, which makes the risk of a big disappointment a little less likely, but still an issue to consider.

In our view, this uncertainty will keep basic-materials stocks, equipment makers and most financial stocks in a range-bound market.
Although we regret that there might be some opportunity cost if we are called out on our Bank of America (NYSE:BAC) covered calls next week, the timing for reducing our exposure to the financial sector is about right. The fact that we’re getting out of the trade with some excellent profits from our many covered calls will help soothe any pain.
As you can see in the following chart, although energy stocks have enjoyed a nice rebound this week, the sector, as represented by the SPDR Energy Sector ETF (NYSEARCA:XLE), is approaching the shoulders of the “head-and-shoulders” pattern that sent the fund to its lows in October.
Source: Daily Chart of the SPDR Energy Sector ETF (XLE) — Chart Source: TradingView

From a technical perspective, we think sectors like this are at resistance and will underperform unless the stimulus is much larger than expected.
The Election
As we mentioned previously, the post-election court fights and the Twitter (NYSE:TWTR) and press conference accusations of fraud have probably distracted many investors from other issues facing the market. That is entirely understandable, and we have been asked a lot of questions about potential risks this might create for the market.
At this point, the court cases seem to be losing steam as more of them fail and vote recounts in Georgia and audits in Pennsylvania reached their completion.
We stand by our comments we made on Oct. 28.
Uncertainty around a presidential transition is rare, but it happened with Bush v. Gore in 2000. The market survived.
In the 2000 presidential election, the market was already in decline, and the uncertainty didn’t help. But traders assumed the U.S. government’s institutional strength would keep things stable. We believe something similar is happening this time. We expect that any remaining uncertainty about the election will be resolved before the Dec. 8 “Safe Harbor” deadline ahead of the meeting of the electoral college.
The Bottom Line
As we mentioned last week, now that the major indexes have exceeded their prior highs, we think there will be some temporary profit-taking where prices may retrace a little or trend flat. If the S&P 500 declines in the short term, we recommend watching 3,400 as support. If that level holds, we would likely want to add more bullish exposure to the portfolio.
American Thanksgiving is next week, and it is usually a slow one for the market, which is good because it gives us some breathing room to get ready for the employment report for November that will be released on Dec. 4.
A slow week is usually good for option sellers like us because we can be pickier about our entry and exit prices.
On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article. 
John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it. John & Wade do not own the aforementioned securities. 
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