Sipping on Starbucks Before Earnings Dear Savio, While the S&P 500 has been climbing to new all-time high after new all-time high, Starbucks (SBUX) has been consolidating. The stock had climbed to an all-time high of $118.98 in the run up to its last earnings announcement in late-April. But following a surprise miss in revenue of $112.60 million, SBUX lost ground as traders started taking profits off the table. 
However, the profit taking stopped when the SBUX bulls came back in and started buying at ~$109, causing the stock to bounce up off support on three separate occasions during the past two months. This is an excellent set up for selling a put-write on SBUX. We recommend you… 'Sell to open' the SBUX July 30th $109 Put Write (SBUX210730P00109000) for a minimum price of $1.80. We chose the $109 strike price because we anticipate this level will hold as support in the run up to the company's next earnings announcement. We estimate that the announcement will come on July 27th, but the company has not yet confirmed this date. We chose the July 30th expiration because it comes just after the expected earnings date. Selling a put with an expiration after earnings gives us an additional boost in premium. Here's How the Trade Can Work Out…
Instant income: With this put sell, we plan to collect an instant income payment of at least $180 per contract. Puts expire out of the money: If SBUX's stock price remains above our $109.00 strike price at expiration on July 30, the puts will expire worthless, allowing us to keep the $180 per contract we receive for selling this option. That’s a return of 8.4% in just 30 days, or an annualized return of 166.8%. Puts expire in the money: If SBUX's stock price is below our strike price at expiration, you will be "put" 100 shares of SBUX at a cost basis of $107.20 ($109.00 strike price - $1.80 option premium). That's a discount of 4% below the current market price. Taking possession of the shares will then allow us to write covered calls against the stock for additional income. If you do not want to take possession of the stock, you will need to "buy back to close" the put before expiration on July 30. We'll keep you posted as the trade progresses. We’ll keep you posted as the trade progresses. | Starbucks (SBUX) common stock was trading for approximately $111.71 per share at the time of this alert. Long-Term Focused Strategic Positions: If you haven’t already entered the following and can still get in for a price at, or better than, our recommended minimum/maximum, we still recommend entering: - Covered Call: (Short) TTWO July 23rd $192.50 Covered Call (TTWO210723C00192500) for a minimum price of $0.75.
- Covered Call: (Short) MU July 16th $90 Covered Call (MU210716C00090000) for a minimum price of $0.50.
- Covered Call: (Short) DIS July 16th $195 Covered Call (DIS210716C00195000) for a minimum price of $0.55.
- Covered Call: (Short) CHGG July 16th $85 Covered Call (CHGG210716C00085000) for a minimum price of $0.95.
- Put Write: (Short) AAPL July 16th $132 Put Write (AAPL210716P00132000) for a minimum price of $1.05.
- Put Write: (Short) MSFT July 16th $255 Put Write (MSFT210716P00255000) for a minimum price of $1.05.
- Put Write: (Short) LOGI July 16th $120 Put Write (LOGI210716P00120000) for a minimum price of $1.60.
- Put Write: (Short) BAC July 9th $40 Put Write (BAC210709P00040000) for a minimum price of $0.42.
- Put Write: (Short) LUV July 2nd $57 Put Write (LUV210702P00057000) for a minimum price of $1.25.
We are still holding the following strategic trades, but either the current value of the short option or the price action of the stock itself don't warrant entering a new trade at this time. If you haven't already entered these trades, we recommend waiting until further notice before opening a new position: - Covered Stock: Take Two Interactive (TTWO) for a maximum of $197.50 -- part of the TTWO covered call position.
- Covered Stock: Micron Technology (MU) for a maximum of $88.00 -- part of the MU covered call position.
- Covered Stock: Disney (DIS) for a maximum of $195.00 -- part of the DIS covered call position.
- Covered Stock: Chegg (CHGG) for a maximum of $100.00 -- part of the CHGG covered call position.
If put-writes and buy-writes are new strategies for you, be sure to check out our Resources page for more information. For more on these trades, be sure to attend our next weekly webinar Wednesday 8 p.m. ET. Sincerely, 
John Jagerson and Wade Hansen
Editors, Strategic Trader
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