Ambev has pulled back following a steady uptrend since 2009, and
the bulls are looking for the gains to continue.
optionMONSTER's tracking programs detected the purchase of 5,000
September 42 calls in the Latin American beverage company for
$0.40. An equal number of September 35 puts were sold at the same
time for $0.40, resulting in a net cost of about zero.
Owning calls locks in the price investors pay to buy stock, while
selling puts obligates them to buy shares if they drop to the
strike price. Combining the two is very similar to holding shares
because they can lose money to the downside but also stand to make
money in the event of a rally.
The main difference is that entire position will become worthless
if ABV remains between $35 and $42 on expiration. One major
advantage of the strategy is that it allows the equivalent of
500,000 shares can be controlled for virtually no initial outlay.
ABV fell 0.45 percent to $38.02 on Friday. The stock has been
building support around $36 for the last three months, and is now
holding above its 50-day moving average. That could make some
traders think it's getting ready for another push to the upside.
Overall option volume in the name was 5 times greater than average
in the session.
(A version of this post appeared on
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