Options Brief: Altria Group (MO) Put Options in Sudden Demand

MO – Altria Group, Inc. – Rampant put buying ensued on Altria Group, Inc. late in the trading day with shares of the owner of Phillip Morris International, the cigarette manufacturer, down 0.65% to $20.07 just before 3:20 pm (ET). Yesterday the largest U.S. tobacco company sold $800 million of 5.25-year notes. Investors wary of continued erosion in the price of Altria’s shares through July expiration scooped up roughly 40,000 puts at the July $19 strike for an average premium of $0.34 per contract. Investors holding these contracts make money – or alternatively realize downside protection on a long underlying stock position – if shares trade beneath the average breakeven price of $18.66 by expiration day next month. Investors seeking more immediate protection purchased 10,000 puts at the higher July $20 strike for an average premium of $0.66 each. Higher-strike put players face an average breakeven share price of $19.34. The sudden surge in demand for put options on MO lifted the stock’s overall reading of options implied volatility 12.8% to 27.27% by 3:27 pm (ET).

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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