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And when you return to your office and sit down at your trading monitor, consider buying February 35 straddles to position for what Goldman Sachs says will be an information-packed fiscal first-quarter earnings report on Jan. 31.
In addition, Starbucks also will release same-store-sales figures, which it previously had reported monthly. The last time management provided sales or earnings information was two-and-a-half months ago.
"Our analyst sees the potential for more volatility than normal on the dual catalyst of Starbucks' same-store sales and earnings being reported together," Goldman Sachs' derivatives strategists are advising clients.
Starbucks said Nov. 16 that it expects comparable store sales growth of 3% to 7% and earnings per share of 87 cents to 89 cents for fiscal 2007.
In anticipation, Starbucks' at-the-money one-month implied volatility is 30%, up five points in the past week, but only 2.5 points above its one-year median, and two points above its three-month historical level.
After earnings, Starbucks' one month at-the-money implied volatility has declined an average of 13%.
Goldman's options strategies estimate straddle buyers would breakeven if shares moved 7% through earnings if implied volatility fell by four points, or 13% of the current implied volatility.
"Over the past eight quarters shares have averaged a move of about 5% on earnings; over the past 12 same-store-sales reports, shares have averaged a move of about 3% on same-store-sales day."
With Starbucks' stock recently down 50 cents at 34.36, the February 35 call was down 25 cents at 1.15 on volume of 2,102 contracts, compared with open interest of 1,027 contracts. The February 35 puts were up 10 cents at 60 cents on volume of 381 contracts, compared with open interest of 955 contracts.
Separately, the specter of Apple's iPhone continues to tantalize traders for another day. Yet, the volatility of Apple's January options has come down since yesterday when it spiked as high as 58%, compared to 26-week average volatility of about 42%, and we recommended stock holders, if they did anything at all on the iPhone news, should consider selling against their stock. Today, Apple's volatility has fallen to about 51%.
The product news is big, of course, but no one knows just how big. Citigroup, which rates Apple a Hold, said iPod sales could slow in the near term as consumers wait to buy the $499 to $599 iPhone, whose price could likely limit sales to the small subset of smart phone users.
(C) Barrons Jan 10 07
In addition, Starbucks also will release same-store-sales figures, which it previously had reported monthly. The last time management provided sales or earnings information was two-and-a-half months ago.
"Our analyst sees the potential for more volatility than normal on the dual catalyst of Starbucks' same-store sales and earnings being reported together," Goldman Sachs' derivatives strategists are advising clients.
Starbucks said Nov. 16 that it expects comparable store sales growth of 3% to 7% and earnings per share of 87 cents to 89 cents for fiscal 2007.
In anticipation, Starbucks' at-the-money one-month implied volatility is 30%, up five points in the past week, but only 2.5 points above its one-year median, and two points above its three-month historical level.
After earnings, Starbucks' one month at-the-money implied volatility has declined an average of 13%.
Goldman's options strategies estimate straddle buyers would breakeven if shares moved 7% through earnings if implied volatility fell by four points, or 13% of the current implied volatility.
"Over the past eight quarters shares have averaged a move of about 5% on earnings; over the past 12 same-store-sales reports, shares have averaged a move of about 3% on same-store-sales day."
With Starbucks' stock recently down 50 cents at 34.36, the February 35 call was down 25 cents at 1.15 on volume of 2,102 contracts, compared with open interest of 1,027 contracts. The February 35 puts were up 10 cents at 60 cents on volume of 381 contracts, compared with open interest of 955 contracts.
Separately, the specter of Apple's iPhone continues to tantalize traders for another day. Yet, the volatility of Apple's January options has come down since yesterday when it spiked as high as 58%, compared to 26-week average volatility of about 42%, and we recommended stock holders, if they did anything at all on the iPhone news, should consider selling against their stock. Today, Apple's volatility has fallen to about 51%.
The product news is big, of course, but no one knows just how big. Citigroup, which rates Apple a Hold, said iPod sales could slow in the near term as consumers wait to buy the $499 to $599 iPhone, whose price could likely limit sales to the small subset of smart phone users.
(C) Barrons Jan 10 07