This earnings season has been a fantastic one for bullish traders looking to enter bullish trades on their favorite stocks.
Many companies are beating their earnings expectations, but their stocks are pulling back a bit as traders take their post-earnings profits off the table.
The pullbacks aren’t lasting long though. The temporary price reductions are simply making these fundamentally sound stocks that much more attractive to the bulls on Wall Street.
Starbucks (NYSE:SBUX) is a great example of this phenomenon.
The company reported earnings last Tuesday after the closing bell and missed revenue estimates by $110 million but beat non-GAAP earnings estimates by $0.09 per share — coming in at $6.67 billion and $0.62 per share, respectively.
However, even though last quarter’s revenue was off by a bit, management boosted its full-year revenue guidance to $28.5 to $29.3 billion, as it sees further post-pandemic recovery.
Management also said comparable store sales growth grew by 9% in the United States and by 91% in China — both of which were above expectations.
We think this is a great time to jump into a new trade on SBUX. The stock has dropped to test support around $112.
This price level served as resistance two times in March, and we’re anticipating it will hold as support in April and May.
To take advantage of the situation, we recommend selling to open a put write on SBUX.
We recommend setting the strike price at a level that gives us a little wiggle room below support and one that has plenty of liquidity across multiple expiration dates.
That should make it easier to get into and out of this trade.
On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it.