Constellation Brands has been climbing steadily, and one investor using options to guide the move.
optionMONSTER’s tracking systems detected the purchase of 5,000 July 90 calls for $2.80 and the sale of 4,000 October 95 calls for an average premium of $2.475. Volume was below open interest in the July contracts, so it appears that a short position was rolled forward in time.
They probably own shares in the beverage company and had sold the 90s as part of a covered-call position. Buying them back today cost $410,000 but gives him or her the right to receive an additional $5 on 400,000 STZ shares–a potential return of $2 million. He or she also removed the upside limit on a 100,000 other shares.
Continue Reading at OptionMonster
— Option Monster
