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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.

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