NEW BEARISH Plays
Altria Group - MO - close: 48.69 change: -0.28
Stop Loss: 50.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on January -- at $---.--
Listed on January 05, 2014
Time Frame: Exit PRIOR to Q4 earnings (see below)
Average Daily Volume = 6.6 million
New Positions: Yes, see below
Why We Like It:
MO is part of the consumer goods sector. They are the biggest cigarette maker in America with 50.9% of the U.S. market. Fortunately for U.S. consumers the use of cigarette smoking is on the decline. MO's revenues last year declined year over year. That didn't stop shares of MO from outperforming the major market indices with a +28% rally in 2014.
The stock sports a 4.2% dividend yield but I doubt that will save it from the looming correction ahead. A big dividend did not help shares of rival cigarette maker PM last year. MO has produced a bearish double top with the twin peaks in December. Now it's starting to breakdown under support in the $49 area.
Tonight we are suggesting a trigger to open bearish positions at $48.25. The nearest support is probably the $45.00 area. We will plan on exiting before MO reports Q4 earnings but there is no confirmed date yet. Right now the company is estimated to report in very late January or early February.
Trigger @ $48.25
- Suggested Positions -
Short MO stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the FEB $50 PUT (MO150220P50) current ask $2.04
Option Format: symbol-year-month-day-call-strike