Trend Tracker bought some call options on Constellation (STZ) as the stock was down, testing support following strong quarterly results due to concerns over a border adjustment tax from the Trump administration, an effective import tariff on the company’s beer business, mostly Corona and Modelo.
Management was clear that the company was prepared for the potential tax law change and could even make changes to mitigate the impact on its Mexican beer business. He sold most of the January $150 calls the next day as the stock bounced and the remaining position after comments from the President Elect over the weekend made the new tax policy even more uncertain.
05-Jan-17
15:39 ET |
TREND |
TrendTracker: Buying some Constellation (STZ) January $150 calls for ~$1.80/contract (147.52 -10.47)
Stock is down despite a strong report on fears of the border adjustment tax but mgmt did a decent job of assuaging fears on the call. The stock would likely be north of $170 if it wasn't for this potential headwind. The CEO is on Mad Money tonight and 22 multiple is cheap vs. Brown Forman (BF.B) closer to 25x -- not performing as well (but no border tax headwind).
|
06-Jan-17
10:28 ET |
TREND |
TrendTracker in response to feedback: When I will sell the Constellation (STZ) options? (148.73 +1.98)
I was looking for the stock to get back to the 150 level to be honest. I won't have very much patience with this position because I tend to hold options too long and there is NO reason to let theta (time decay) eat away at your naked Long option positions.
- I will likely take some off if it can break above 149 and then take more off near 150, possibly leave a few on for a bigger move to the upside.
- Currently sitting on decent gain bid/ask $2.05-2.35 vs. $1.80 entry.
|
06-Jan-17
13:26 ET |
TREND |
TrendTracker: Taking off half the Constellation (STZ) calls at $2.30/contract for +28%
|
06-Jan-17
14:32 ET |
TREND |
TrendTracker: Taking off most of the remaining Constellation (STZ) calls at $2.50 for +39%; leaving a couple on in case the stock can extend the bounce next week (149.74 +2.99)
|
17-Jan-17
09:37 ET |
TREND |
TrendTracker: Selling the last two STZ Jan $150 calls here at $5.50 for +200% (155.69 +6.41)
|
|