Starbucks put volume is very strong this morning as shares trade near $47.65 and a trader buys 6000 July 45puts against a sale of 12900 July 40 puts on the PHLX for a slight net credit before commissions, opening on both legs. This type of ratio spread may reflect a moderatly bearish view on SBUX since maximum value of $3million is attained SBUX were to expire at $40 in 173days, and it may also express a view that the put skew (4pts btw the 40 and 45 strike) is steeper than the trader believes it should be. Shares have not seen sub $40 since early Oct and earnings last week had little effect on share price.
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Henry Schwartz is the president of Trade Alert LLC, a provider of real-time options analysis tools to leading Wall Street firms. His systems analyze hundreds of thousands of transactions per second to help professionals identify and interpret market activity in real time, supporting informed trading decisions and intelligent idea generation. He has held institutional trading and management roles with Bank of America, Bear Stearns, Salomon Brothers and the Hull Group, and made markets on the CBOE and AMEX floors in the US, and EUREX and MONEP overseas. Prior to founding Trade Alert, he led the electronic market-making group at Bank of America coincident with the launch of the International Securities Exchange. He received his bachelor’s degree in Economics from the University of California, San Diego and his MBA from NYU’s Stern School of Business.