With the Altria board meeting, there is much anticipation that either a huge buyback, dividend increase or the PMI (Phillip morris International) spin will finally be announced. It would appear that option buyers are betting that something is coming soon.
The December 70 strike, in the money by a dollar or so, has seen more than 18,500 contracts change hands today on the long-dated option. Heading into today's action, this strike was already home to peak open interest in the December call series, with nearly 60,000 open calls in residence.
Several blocks of 1,000 or more contracts have changed hands throughout the trading day. The largest transaction was a block of 2,418 contracts that changed hands at 11:11 a.m., trading off the bid price of $4.50 per contract. Another block of 2,250 contracts was traded at 1:56 p.m. and also traded at its respective bid price, changing hands at $4.30 per option. Given this trend, it is possible that options players are closing their positions.
MO shares have moved marginally higher in today's trading and are within striking distance of another new all-time peak. Last week, the stock hit a new high of 72, overcoming short-term chart resistance at the 71 level.
This research is from Shaeffer's Research