Constellation Brands (STZ) rallied $2.50 to $21.87 and hit a morning high of $22.21 in active trading of more than 11 million shares on reports AB InBev is in talks to buy Mexican beer-maker Modelo. The Wall Street Journal is reporting that InBev is near a deal to clinch the 50 percent stake in Modelot that it doesn’t already own. Modelo was up almost 10 percent on the Mexican stock exchange. Meanwhile, STZ is rallying because the company exports Modelo beer products in the US under a Crown Imports joint venture agreement. There is speculaton that Constellation would receive a cash payment from InBev for its stake in the joint venture — Bloomberg. STZ is up on the news and options order flow is bullish. 5,600 calls and 660 puts traded on the stock so far. July 22.5 calls are the most actives. 2,575 traded. The contract is 2.8 percent out-of-the-money and expiring in 25 days. August 25, August 22.5 and October 35 calls are the next most actives and 30-day ATM vols surged 50 percent to 44.5.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.