Investors in Constellation Brands Inc (Ticker: STZ) can engage with new options expiring on August 8. A put contract at the $160.00 strike price has a current bid of $4.60, allowing an investor to effectively purchase shares at a cost basis of $155.40. The current trading price is $160.87, making the put contract approximately 1% out-of-the-money, with a 55% chance of expiring worthless, potentially offering a 2.88% return on the cash commitment.
On the call side, a contract at the $165.00 strike price is bid at $4.10. If shares are purchased at $160.87 and the call is sold, an investor could see a total return of 5.12% if the stock is called away by expiration. This call is approximately 3% out-of-the-money, also with a 55% chance of expiring worthless, which would yield a 2.55% additional return. Implied volatility for the put is 33% and for the call is 35%, compared with the actual trailing volatility of 31% over the last 250 trading days.
