SBUX buy the dip?

Jun 20, 2018

Selling a 1 lot at the 50 strike for 1.32 and 93 D.T.E. for an initial basis of 48.68 which is the 34 delta strike. Probability of profit is 70% and even though their customers are all addicted to the product I am not convinced I want this stock and may just treat this as a trade. A put ratio could not be placed for a credit (5 wide strikes) so this is where I will start my position. Volatility is high enough at 53% but it says earnings are July 26......since it has dropped $5 today I am assuming they have pre-announced and maybe earnings will be a non-event?? Wish me luck.

Jul 19, 2018

Trade closed manually

Closed this trade today for 1.26 (a loss counting commissions Fidelity) The stock dropped a little more than I thought and with the vol expanding for earnings I think the risk is more than the put is worth. I thought the bounce and theta decay would have taken more out of it but I was wrong so scratching this one and may enter if we get a better entry after earnings.

Jul 27, 2018

Note

Not that it matters...but SBUX reported earnings and barely dropped around 50.79 but the options premium barely collapsed (1.06) for the 50 put now. I would have re-entered the trade had we fallen again or if the premium increased but no interest in trading directionally with no volatility edge in the premiums.