Bulls Toast Constellation Brands

By David Russell, reporter at OptionMonster

NEW YORK -- Constellation Brands ( STZ) is pulling back, and the bulls are getting in the spirit with the alcoholic-beverage company.

OptionMonster's tracking systems detected the purchase of more than 9,000 April 32.50 calls, most of which priced for $3.39. Volume was more than 600 times open interest at the strike before the trade appeared.

Long calls lock in how much investors must pay to buy a stock, so they can generate major leverage in the event of a rally. But these options can lose most or all of their value if the shares fail to move.

Constellation rose 0.82% to $32.76 Thursday. It's been exploding higher since late June, when it took over selling Corona beer in the United States. The shares had fallen in the last week, and Thursday's call buyer apparently thought it was a good entry point.

The trade occurred less than 20 cents from the bottom of the stock's range in the session and was followed by a rebound in the share price. Total option volume in the name was 24 times greater than average.

Russell has no positions in STZ.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

If you liked this article you might like

Under Armour CEO Kevin Plank Expands His Baltimore Empire to Whiskey and a Hotel

Blame the Millennials: Cramer's 'Mad Money' Recap (Wednesday 8/9/17)

Cramer: Follow the Millennials

Talk About the Passion; Survivor Stocks -- Jim Cramer's Top Thoughts