Bears target Constellation at highs

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Constellation Brands is back to long-term resistance, and investors are positioning for a drop.

optionMONSTER's Depth Charge monitoring system detected the purchase of 2,780 October 30 puts for $0.85 and $0.90 against open interest of just 877 contracts. The trades accounted for almost all the volume in the company, which sells a wide range of alcoholic beverages.

STZ rose 1.36 percent to $32.72 on Friday. The stock is up more than 50 percent since June, when it announced a deal giving it complete control over the import of Corona beer into the U.S. That has brought the shares back to the same level where they peaked in mid-2005, which could make some chart watchers expect a pullback.

Those puts grant holders the right to sell STZ for $30 through expiration, so they will appreciate if the stock declines. Investors often buy puts as a hedge rather than selling shares. See our Education Section for more hedging strategies.)

Overall option volume in the name was quadruple the daily average in the session, with puts outnumbering calls by a bearish 9-to-1 ratio.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: STZ

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