Synthetic put bearish on Constellation Brands Inc (STZ)

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Constellation Brands, Inc. (NYSE:STZ) – A large stock and options combination play on wine, beer and spirits producer, Constellation Brands, Inc., appears to be a synthetic put on the name that benefits from bearish movement in the price of the underlying in the near term. Shares in Constellation Brands, Inc. (NYSE:STZ), up roughly 80% since mid-June 2012, are currently down 1.1% on Monday afternoon to stand at $35.24 as of 12:05 p.m. in New York trading. The hefty transaction in Constellation Brands, Inc. (NYSE:STZ) options today pushed overall options volume to a level well above the stock’s average daily options volume of around 13,100 contracts. The largest transaction in Constellation Brands, Inc. (NYSE:STZ) options appears to be the purchase of a 20,000-lot Feb. $37.5/$42.5 call spread for an average net premium outlay of $0.75 per contract, tied to the sale of Constellation Brands, Inc. (NYSE:STZ) shares at $34.80 on a 25.5 delta.The synthetic put position is a bearish strategy that prepares the trader to profit from declines in the price of Constellation Brands’ shares through February expiration.

Constellation Brands, Inc. (NYSE:STZ)

PetSmart, Inc. (NASDAQ:PETM) – Shares in the specialty retailer of products and services for pets and their owners are in negative territory on the first trading session of the week, down 1.0% at $67.50 as of 11:30 a.m. ET on Monday. A sizable bearish options strategy initiated on PetSmart, Inc. (NASDAQ:PETM) today suggests one trader is bracing for shares to potentially extend declines during the next few months. It looks like the strategist purchased a 2,000-lot April $60/$65 put spread for a net premium of $1.80 per contract. The bearish position starts making money if shares in PetSmart, Inc. (NASDAQ:PETM) decline 6.4% from the current price of $67.50 to breach the effective breakeven point at $63.20. Maximum potential profits of $3.20 per contract are available on the trade in the event that shares drop more than 11% to settle below $60.00 at April expiration. PetSmart’s shares last traded below $60.00 in May 2012.

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