Trader bets on more downside for tobacco giant.
Tobacco companies have had a rough year, amidst long-term sales declines and a decision to pass on major investments in the growing cannabis industry.
One trader sees some more downside, with a large put option trade on Altria (MO). On Thursday, over 9,500 contracts of the July 12th $49 put options traded, a 57-fold increase in volume on the option.
- This Leaked Wall Street Calendar Is Tipping of Repeat Gains
Multi-millionaire Florida hedge fund manager has just released a secret Wall Street calendar that he’s been using to land massive gains on the same stocks on the same dates for an entire decade.
And just by looking at his recent trades…. There’s no signs of this “repeat phenomenon” slowing down…
168.09% on SHW… 60.0% on ATVI… 168.97% on SMG… and TEN others just in the last few months… all going up on the same dates, every year, for an entire decade.
This option, with shares at $48, is already in-the-money. So while it expires in 15 days, the option can be exercised as long as shares are under the $49 strike price.
Any big down day for the tobacco company in the meantime should have a dollar-for-dollar move in the option as well. In short, this $1.50 option could go to $2.50 if shares drop from $48 to $47, although with so little time left on the option, there will be some noticeable loss of the remaining time premium.
Action to take: For a short-term bet on a falling market, the tobacco stocks have been a good place for a trade. For those with a longer-term outlook, buying into the tobacco space at these prices can get a good entry point, and historically high dividend yields relative to where shares of companies like Altria usually trade.