Altria Stock Sinks Amid Reports of Juul Ban

Put activity is ramping up today

Deputy Editor
Jun 22, 2022 at 2:23 PM
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A Wall Street Journal report just spelled trouble for Altria Group Inc (NYSE:MO), whose shares were last seen down 9.4% to trade at $41.42, earlier making its way onto the short sale restricted (SSR) list. According to the report, the U.S. Food and Drug Administration (FDA) is preparing to order Altria's company Juul Labs Inc. to remove its e-cigarettes from the U.S. market. Adding even more pressure to the tobacco concern is recently revealed plans from the White House, which showed the Biden administration plans to cut nicotine level in cigarettes.

Put traders are taking notice of the news. At the halfway point, 81,000 puts have already crossed the tape, which is 12 times what's typically seen at this point. Meanwhile, the 52,000 calls that have exchanged hands represent quadruple the intraday average volume. The two most active contracts, the weekly 6/24 41- and 42-strike puts, have new positions being opened at both, while the January 2023 55-strike call is home to the top open interest position.  

This preference for puts is nothing new, according to Altria stock's Schaeffer's put/call open interest ratio (SOIR), which ranks in the 76th percentile of annual readings. This relatively high reading indicates short-term options traders have rarely been more put-biased in the past 12 months. 

Analysts are on the fence as well. In fact, of the 10 covering brokerages, six rate the equity a "hold" or worse.

On the charts, MO began the year on a high note, finishing December through April with monthly wins. However, it snapped that win streak in May, and is now pacing for its worst monthly performance in more than a decade. The security has stumbled back below the 320-day moving average, drop it had managed to avoid since late 2021. Year-to-date, Altria stock is down nearly 13%.

MO Chart June 22

 

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