Green Mountain put volume surges before Starbucks news
* Green Mountain downside March puts heavily traded
* Trading in Starbucks $52.50 strike calls stand out
March 9 (Reuters) – A heavy burst of bearish option action in Green Mountain Coffee Roasters Inc in the hours before Starbucks announced plans to launch a single-cup coffee and espresso brewer has raised eyebrows among some option market participants.
Green Mountain’s Keurig machines are the No. 1 single-cup brewers in the United States. Starbucks Corp, the world’s biggest coffee chain, provides coffee refills for Keurig machines under a partnership with Green Mountain and its announcement late on Thursday was seen as a competitive threat to its partner.
Option bets on a big move up in Starbucks shares and on a sharp drop in Green Mountain stock preceded the news.
“The level of aggressiveness that traders early on Thursday came for Green Mountain March downside puts was very suspicious,” said Alan Thompson, options market maker at Timber Hill, a division of Interactive Brokers Group. “It raised our eyebrows.”
The put buying in Green Mountain “was off the charts into last night’s announcement,” said Jon Najarian, a co-founder of online brokerage TradeMonster in Chicago, who also noticed very strong buying of upside calls in Starbucks on Wednesday.
“We expect that the regulators will take a deeper look at both Starbucks and Green Mountain ahead of (Thursday) night’s announcement,” Najarian said.
The U.S. Securities and Exchange Commission, which looks into unusual stock and options activity, declined to comment.
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The fact that any trade would “raise eyebrows” just goes to show how much disregard everyone has for material non public information. You could hide this with such minimal effort and still make more money in a day than most will make in their lifetimes. But of course nothing will come of this.
Raises eyebrows = guilty.