CalPERS Burns Tobacco Stocks Philip Morris International Inc., Altria Group Inc

Cigarette stocks Philip Morris International Inc. (NYSE:PM) and Altria Group Inc (NYSE:MO) are down on CalPERS' decision to eschew Big Tobacco

Dec 20, 2016 at 10:11 AM
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Cigarette stocks Philip Morris International Inc. (NYSE:PM) and Altria Group Inc (NYSE:MO) are struggling out of the gate, after the California Public Employees' Retirement System (CalPERS) voted to further restrict tobacco investments. At last check, PM is down 0.8% at $89.66, while MO has shed 1.1% at $66.38.

This is just the latest setback for Philip Morris shares, which have been charting a series of lower highs since hitting an all-time peak of $104.20 in mid-July -- notwithstanding another rock-solid quadruple witching week. In fact, the stock's year-to-date lead has been narrowed to 2%.

As PM shares sink, options traders have been jumping aboard the bearish bandwagon. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly four puts for every call in the last two weeks. The resultant put/call volume ratio of 3.77 ranks only 2 percentage points from an annual peak, suggesting puts have been bought to open over calls at an accelerated clip.

Short-term open interest is extremely put-skewed, too. Philip Morris International Inc. sports a Schaeffer's put/call open interest ratio (SOIR) of 1.50, resting in the high 96th percentile of its annual range.

On the other hand, rival MO has fared much better on the charts over the long haul, prompting bullish betting in the options pits. Despite this morning's dip, the stock is 15% higher in 2016, and has been ripping upward after bouncing off its 320-day moving average in mid-November.

Options traders have responded bullishly in recent months, too. Altria Group Inc boasts a top-heavy 50-day ISE/CBOE/PHLX call/put volume ratio of 2.40, with long calls more than doubling puts. In addition, this ratio registers only 10 percentage points from a 12-month peak.

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