SBUX Bears Keep Retreating — Options Hedge Fades Too

Starbucks reports Q3 fiscal 2026 earnings tonight with short sellers continuing to retreat and options hedging pulling back from its recent peak — a notably cleaner setup than yesterday's preview captured.

Short interest has shed another leg since yesterday's article. Shares short fell a further 2.1% on July 27 to 41.6 million, representing 3.7% of the free float — down nearly 19% over the past month. The ORTEX short score dropped to 40.7 from 41.3 on July 24, its lowest reading in the recent history shown. Borrow conditions remain entirely unconstrained: cost to borrow is just 0.38%, and availability has widened further to 2,402% — up 35% on the week — meaning there is essentially no pressure on the lending market in either direction. Bears are not just reluctant; they are actively covering.

The options picture has shifted meaningfully in the past 24 hours. The put/call ratio touched its 52-week high of 1.25 on July 23-24, then pulled back to 1.08 yesterday — still above its 20-day average of 0.98, but less than one standard deviation elevated. That retreat in hedging demand, combined with the short cover, leaves positioning looking more neutral than defensive heading into the print. The last comparable quarterly release, in late April, produced a 7.8% single-day gain and a 7.2% five-day gain — the reference point options traders are implicitly pricing around.

The analyst community leaned constructively into this print. Wells Fargo and Morgan Stanley both lifted targets to $120 and $111 respectively on July 16, maintaining Overweight ratings, while Citigroup nudged its Neutral target to $108 from $101. The consensus mean sits at $106.45, a modest premium to the $103.10 close. Bulls point to the new CEO's cost-savings programme and recovering U.S. traffic; bears flag that EPS guidance only modestly exceeds recent results and that macro pressure on consumer spending remains a live risk. Capital Research stands as the dominant holder at 19.4% of shares, providing a stable anchor, while insider activity — a series of small executive sells through June and July — carries low significance scores and reads as routine rather than cautionary.

Tonight's print is less about whether the turnaround story is intact and more about whether same-store sales momentum and margin progression are moving fast enough to justify a stock that has already rallied roughly 22% year-to-date.