Option traders pocketed big profits in Constellation Brands as it climbed to new highs today.
On Oct. 10, Investitute’s market scanners identified the purchase of 4,434 January $210 calls for $8.20 and $8.30 as part of a bullish spread. Shares were trading at $208.49 at that time.
Those calls sold for $19.54 this morning, more than double their original purchase price. The stock rose 9.8 percent in the same time period, reflecting the type of leverage that can be obtained with options. It is the second winning trade in Constellation posted on Investitute in less than a week.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
STZ reached a 52-week high of $229.50 early this morning but pulled back to close at $225.79, off 0.75 percent on the session. The alcoholic-beverage company has rallied as it has ventured into new areas, including an investment in a Canadian marijuana business.