Three Prominent Firms. Three Distinctive High-Activity Choices. Three Long Strangle Strategies.
Hey there! Let's dive into the options market and check out some potentially profitable plays for investors looking to cash in on the current volatility.
If you're not currently a billionaire but still want exposure to VC-backed companies like Discord or Perplexity, here's why you should join our list for our website's daily unusual options report.
Yesterday might not have been a super busy day in the options market, but there were still 925 unusually active options. With 526 calls and 399 puts, it's a mildly bullish sentiment. However, anytime the unusual options activity is below 1,000, it indicates lower investor interest.
Despite the lower investor interest, I've found three great companies among the top 100 unusually active options, providing investors with possible long strangles to benefit from the current volatility.
Starbucks (SBUX), Spotify Technology (SPOT), and GE Healthcare Technologies (GEHC) are the three companies in question. To qualify for consideration, the Volume/Open Interest (Vol/OI) had to be at least 7.41, which places them among the 100th most unusually active options from yesterday.
Starbucks (SBUX)
Starbucks had two unusually active call options yesterday, with DTEs on different ends of the spectrum: 16 and 142 days. The world's largest coffee chain has struggled mightily to grow in recent quarters. But I've been bullish about Starbucks as long as I can remember.
Let's take a look at the addressable pain points in its operating system and see why I believe this turnaround will work.
Of the two unusually active call options, I prefer the Sept. 19 $80 strike. A long straddle is when you buy a call and put at the same strike price. You like the stock but are unsure of its direction and expect increased volatility in its share price. So, that involves buying the $80 call and $80 put expiring in September. The ask price for the call early in Thursday trading is $7.65, while the $80 put ask price is $5.95, for a net debit of $13.60.
Spotify Technology (SPOT)
Spotify's addition of podcasts to its music offerings in 2015, driven by strong engagement and high retention, has made it a dominant player in the highly competitive music streaming market. The launch of audiobooks in September 2022 helped turn Spotify into a profitable company.
Of the two unusually active call options, I prefer the May 9 $650 strike because the net debit is much lower. The ask price for the $650 call in Thursday trading is $3.20, while the $650 put ask price is $47.65, for a net debit of $50.85. The breakeven on the upside is $700.85, while the breakeven on the downside is $599.15.
GE Healthcare Technologies (GEHC)
The healthcare spin-off of the legacy GE industrial conglomerate is showing signs of optimism, with revenue in Q1 2025 coming in above expectations. However, investors didn't like its revised guidance, which reflects the damage tariffs will do to its business.
There is only one unusually active call option to consider with GEHC. That's May 9 $72 strike with a Vol/OI ratio of 14.90. The ask price for the $72 call in Thursday trading is $0.40, while the $72 put ask price is $4.10, for a net debit of $4.50. The breakeven on the upside is $76.50, while the breakeven on the downside is $67.50.
Remember, bullish options activity often reflects sentiment rather than fundamentals. Traders may be positioning for mean reversion after recent declines, so it's always essential to do your research and make informed decisions.
Interested in more insights on these or other companies? Make sure to join our list for our website's daily unusual options report. Happy trading!
- In the given text, it's suggested that investors who wish to gain exposure to VC-backed companies like Discord or Perplexity, but aren't currently billionaires, should consider joining a list for a daily unusual options report, providing them with possible long strangles to benefit from the current volatility.
- According to the text, among the top 100 unusually active options in 2021, Starbucks (SBUX), Spotify Technology (SPOT), and GE Healthcare Technologies (GEHC) are the three companies with Volume/Open Interest (Vol/OI) high enough to be considered.
- As mentioned in the text, one of the options for Starbucks (SBUX) that investors may find interesting is the Sept. 19 $80 strike. A long straddle could be created by buying this call and the corresponding put, which would provide investors with the potential to benefit from the expected volatility in Starbucks' share price.
