Skip to main content

Unusual Option Activity in STZ

Last month the US Department of Justice blocked InBev’s deal to acquire Grupo Modelo on fears it would give InBev monopoly pricing power in the US. Yesterday InBev announced that it was selling the Piedras Negras brewery to Constellation Brands so that their acquisition of Modelo would not create a monopoly. The real winner in this deal is not InBev or Modelo, but Constellation Brands, which was able to buy the Piedras Negras Brewery, along with “perpetual rights” to sell Corona, for dirt cheap.

Ahead of the announcement one option trader made a big bet that something like this would happen when they bought 1500 STZ Feb 35 calls for $0.05 that expire today. At the time the stock was trading $31.88 and today is trading $43.86, 38% higher. The total premium paid for the calls on Wednesday was $7,500 and today the position is valued at $1.3 million, a 17,333% winner in two days. This trade seems a little sketchy and is undoubtedly catching someone’s eye over at the SEC.

Comments

Anonymous said…
Hi there very nice web site!! Man .. Excellent
.. Superb .. I will bookmark your site and take the feeds also?
I'm sure you'll fіnd our revіeωs to be honеst anԁ accurate.
Fеel fгее to ѕurf to mу page .
Learn Even More
February 18, 2013 at 12:37 PM
nitu said…
This is very good information.

Hey there! I'm at work surfing around your blog from my new iphone! Just wanted to say I love reading through your blog and look forward to all your posts! Carry on the outstanding work!Maybe you can Visit this site. It’s very good. ..!
February 25, 2013 at 1:26 AM
Post a Comment

Popular posts from this blog

Morning Update

ECB officials said last night that ECB President Mario Draghi will likely wait to hear Germany’s Constitutional Court’s ruling on the EFSM before publicly unveiling his plans. Many were hoping Draghi would unveil his plan after the ECB’s September 6th meeting, but this is becoming increasingly unlikely. Today Reuters is reporting that Germany is the latest European nation to begin studying the possible impact of a Greek exit from the Euro. This comes ahead of Chancellor Merkel’s meeting with Greece’s Prime Minister today. Merkel has repeatedly said that she would like Greece to remain in the common currency, though clearly someone in Germany believes a Greek exit is possible outcome worth preparing for. This morning US new durable goods orders numbers we released for July, coming in at a gain of 4.2% M/M. Though this was strong than expected, it was primarily driven by strong aircraft sales. Non-defense orders excluding aircraft were down a sharp 3.4% M/M versus a 0.2% decline expecte...
Post a Comment
Read more

Is the KCJ Foreshadowing a 2008 Repeat?

The CBOE Correlation Index (KCJ) is close to the lowest level we have seen since it was first listed in 2007. The KCJ measures the implied movement of the S&P 500 components options, compared to the implied movement of the S&P 500 index options. Simply put, the higher the number, the more likely all stocks are going to move together. Conversely, a low number will be characterized by sector rotation, and flat markets; one sector moves higher, another moves lower.  (Source: Access Hollywood) Correlation, for lack of a better term, is correlated with volatility. Not surprisingly, 30-day S&P 500 historical volatility is near the low level of 6.5%. Currently at 33.5, KCJ is sitting close to rock bottom, lower than where it was in 2007, (but not lower than where Lindsay Lohan was in 2007).  So far this year, the market has been able to grind higher, characterized by leadership in FANG(Facebook Apple/Amazon, Netflix, Google) and sector rotation. A...
Post a Comment
Read more