How a 7% Loser Turned Into a 6% Winner in 12 Months with Options
Analysis Info
Type
Objective
Generated
Feb 9, 2026 at 12:43 AM
Model
gemini-2.5-flash
Key Insights
12 insights1
The primary objective is to conduct a detailed review of a Starbucks (SBUX) trading position held over the last year. This involves examining every transaction, including dividends, commissions, and fees, to determine the final cost basis and overall profitability.
2
For calculation purposes, the current price of Starbucks is established at $85.50. The current position consists of 100 shares and one deep-in-the-money long call, which was used as a synthetic substitute for dollar-cost averaging to save on buying power.
3
The investment strategy serves as a case study for long-term investors who want to maintain a core stock position while actively trading around it. This approach aims to manage the position through various market conditions, including periods of significant price increases and subsequent declines.
4
The Starbucks position began on December 27, 2024, with the purchase of 100 shares at a price of $92.18. Shortly after, an active management phase began by selling call options against the shares to collect premium.
5
The first two premium-collection trades resulted in gains of $0.77 and $1.29 per share. These trades involved selling calls and buying them back at lower prices as the options decayed or the stock price fluctuated.
6
An "earnings bonanza" sequence around April 29 involved three distinct trades: a long call spread, a short put, and an expected move butterfly. The call spread and short put yielded profits of $0.35 and $2.02 respectively, while the butterfly resulted in a $1.24 loss.
7
Management continued through June and July with additional premium tranches and earnings trades. While the third and fourth premium tranches yielded profits of $1.04 and $1.55, an earnings butterfly during this period expired worthless, resulting in a loss of $0.93.
8
Two final premium-collection tranches resulted in profits of $0.29 and $0.69. A final earnings butterfly trade placed on October 29 was closed the following day for a modest profit of $0.27.
9
Total commissions and fees for the year-long activity amounted to $24.26, which is roughly $0.25 per share. During the same period, the position collected four dividend payments totaling $2.45 per share.
10
The deep-in-the-money long call purchased as a dollar-cost averaging substitute contributed significantly to the bottom line. Bought for $26.70 and currently valued at approximately $30.70, this component added $4.00 per share in profit to the overall project.
11
A final tally of all components—including premium capture, dividends, fees, and the synthetic call—shows a total gain of $5.62 per share. This results in a 6.1% return on the original investment basis of $92.18.
12
The active management strategy turned a potential loss into a profit, as the underlying Starbucks stock price dropped by approximately 7.25% over the 12-month period. Profitability was driven primarily by selling call options into market strength and maintaining a "clean delta" during stock rallies.
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