Trade of the Day for April 29, 2019: Starbucks (SBUX)

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We are recommending a new bullish trade on Starbucks (NASDAQ:SBUX) in the form of a put write.

We’ve been making a lot of risk adjustments in our portfolio by exiting profitable positions as earnings season has gotten underway. We exited our SBUX May 3rd $72 Put Write last week before the company reported earnings, just in case the stock moved against us.

Now that SBUX’s earnings reports are out and it is maintaining its uptrend, we think this is a great time to get back into our bullish position.

SBUX’s Mixed Earnings

SBUX had a mixed announcement last week. The company missed revenue expectations by $20 million but beat earnings expectations by $0.03 per share — coming in at $6.31 billion and $0.60 per share, respectively.

The news got better when management provided forward earnings guidance of $2.75 to $2.79 per share for the year when Wall Street was only expecting $2.73.

The better-than-expected earnings guidance seems to have kept SBUX above support at $75 on Friday after some initial profit taking pushed the stock lower after the opening bell.

New Support at $75

The $75 price level served as resistance in late March and early April and has now served as support on April 17 and again last Friday. We fully expect SBUX to remain above this level until our puts expire.

Daily Chart of Starbucks (SBUX) — Chart Source: TradingView

There are still concerns about SBUX’s competition with Luckin Coffee in China, but because the stock is reaching all time highs, we’re confident in its bullish momentum.

This will be the seventh put write we’ve recommended on SBUX in 2019. This strategy of selling put writes and buying them back at a lower price keeps paying off, and we want to keep collecting income on this stock going into May.

To find out which puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today. 

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.

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