Starbucks has a recovery plan. The plan is working. Mike Khouw knows how to trade it through options. You do not know how to trade it through options.
Khouw breaks down his strategy for the coffee giant. He uses calls. He uses puts. He probably uses spreads because that's what people who understand options do when they want to sound smarter than you. And he is smarter than you. The man gets paid to explain derivatives on television while you're Googling what implied volatility means for the fourth time this month.
The recovery plan is working. That's the headline. Not "might work" or "could work." Working. Present tense. Which means by the time you read this and decide to copy Khouw's trade, the recovery will either be over or priced in or both. But you'll do it anyway because watching CNBC makes you feel like you're in the game.
Here's what happens next. You open your brokerage app. You search for Starbucks options. You see numbers that might as well be hieroglyphics. Strike prices. Expiration dates. Greeks with names like theta and vega that you pretend to understand because you watched a YouTube video once. You pick something that feels right. It expires worthless. Mike Khouw closes his position for a profit and moves on to the next earnings play.
The recovery plan is working for Starbucks. The options trade is working for Khouw. Your account balance is working its way back to the price of a venti latte.
Photo by Athar Khan on Unsplash
Leave a Comment