Starbucks has been going straight up, and one investor is using a complex strategy to get long.
optionMONSTER’s Heat Seer monitoring program detected the purchase of 1,500 April 77.50 calls for $5.15. Equal-sized blocks were sold at the same time in the April 67.50 puts for $2.24 and the April 85 calls for $2.33. Volume exceeded open interest at all three strikes, indicating that new long positions were initiated.
The strategy combines a vertical call spread with short puts, which reduced the cost to just $0.58. He or she now stands to collect $7.50 if the coffee chain closes at or above $85 on expiration–a profit of 1,193 percent. They could also lose money to the downside because they sold puts.
— Option Monster