PM – Philip Morris International Inc. – Shares of the manufacturer of cigarettes and other tobacco products edged 2.30% lower this morning to $44.07 just after 11:00 am (ET). The decline in the price of the underlying shares inspired some traders to pick up near-term put options. Approximately 1,200 put contracts were purchased at the June $40 strike for an average premium of $0.17 apiece. Investors long the puts amass profits on the position if Philip Morris International’s share price plummets 9.6% from the current value of the stock to breach the average breakeven point to the downside at $39.83 by expiration day. The demand for option contracts on the cigarette maker lifted PM’s overall reading of options implied volatility 7.9% to 28.90%.
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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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