Here's Why Call Option Traders Love Dutch Bros Stock

Key Points

• Dutch Bros caught the attention of a multi-million dollar call options bet recently, as the stock's momentum starts to justify new buyers.
• Fundamentals show that this company dominates the coffee industry's growth, especially compared to Starbucks.
• Institutions and Wall Street analysts see double-digit upside in the coming months.

Finding a stock that is well-regarded by the market is simple enough; investors can judge the initial sentiment gauge by how the company in question has traded recently, as price action usually tells a deeper story when outperformance has been the norm. Then comes the buying from broader market participants, as momentum gets everyone excited about future opportunities to follow. However, there’s often a more powerful and deeper theme at play.

By tracking unusual call options activity in a stock, investors can gauge when traders have become specifically bullish in one name, especially as the implications of buying call options are considered. Buying options is not like buying a stock outright, which usually creates a linear relationship. Options carry two main caveats: both leverage and a timing element, due to the fact that they all come with an expiration date.

For this reason, finding that traders decided to buy an unusual amount of call options in a stock like Dutch Bros Inc. NYSE: BROS can lead investors to assume that convictions are high behind a bet for the company’s price moving a lot higher than where it trades today, and all within a reasonable time table due to options expiration dates.

Here are some reasons why this bet might have been made.

Conviction Float to Dutch Bros Stock

As of early May 2025, it was reported that up to 12,763 call options were bought for the stock, which is a 94.6% increase from the usually reported volume. This means that the conviction behind a stock rally is higher than typically reported, making this a multi-million-dollar bet when the effects of leverage are considered.

With this in mind, these traders must have a strong reason to take on such a view. Starting with price action, this retail stock has challenged a broader consensus view that discretionary consumer spending would be coming down and affecting names like this one this year, as the stock managed to rally by over 21.1% on a year-to-date basis.

Zooming out, Dutch Bros stock has rallied by as much as 76.2% over the past 12 months, a feat that likely drove more traders to bet on continuing such momentum into the future. All things considered, investors need to benchmark this performance to something other than the broader S&P 500 index, more like a close peer instead.

Compared to shares of Starbucks Co. NASDAQ: SBUX, Dutch Bros stock has outperformed by as much as 25% over the past quarter alone, signaling significant strength over one of the biggest names in the coffee industry. Of course, there is a big reason to consider behind this outperformance, and likely the bullish thesis these traders took on.

Breaking Down Value in Dutch Bros

When looking at the company’s financials, investors can see that Dutch Bros reports up to 26.3% in gross profit margin, which, compared to the 25% reported by Starbucks, should get a lot of investors excited about this smaller $10.4 billion company versus Starbucks’ much larger $91.2 billion market capitalization.

Consumers who have tried both brands can also notice a few divergences between the quick-oriented services in Dutch Bros and the often collapsed drive-through lines at Starbucks, not to mention the massive divergence in prices. While coffee is often a recession-proof item, there is likely a limit to how much people would be willing to pay for it.

This is where Dutch Bros's lower price focus beats Starbucks' during an economic environment that has made the average consumer much more budget-conscious. Keeping these factors front and center might have driven some of these call option buyers to flow into the stock, though they weren’t alone.

As of May 2025, allocators from Deutsche Bank decided to boost their holdings in Dutch Bros stock by as much as 12.2%, bringing their net position to a high of $37.8 million today. This supports a higher price thesis for investors to consider.

The Markets Like Dutch Bros Here

Now that the stock trades at only 73% of its 52-week high price, this name becomes a reasonable acquisition target for those willing to look deeper into it. The first sign many view comes from the recent changes coming out of Barclays analysts, who reiterated their Overweight rating for Dutch Bros and placed a higher valuation on it.

Seeing the company’s fair value at $82 per share would call for it to flirt back with its 52-week high prices, as well as imply a net rally of as much as 30% from where it trades today. This setup (which clearly favors the bulls) had a negative effect on the bears out there.

Over the past month, Dutch Bros stock’s short interest declined by as much as 9.8% to show signs of bearish capitulation as the risk-to-reward ratio stops making sense for the short side, especially as these traders joined the party on stronger financials and a clear path higher with the current momentum.