The shares of Altria Group Inc (NYSE:MO) are lower today, after U.S. Senate Majority Leader Mitch McConnell of Kentucky announced plans to introduce a bill in May to raise the minimum tobacco-buying age to 21. That legislation would also encompass vaping devices -- including the Juul, of which Altria owns a 35% stake -- with McConnell noting "epidemic levels" of teenage e-cigarette users. Against this backdrop, eleventh-hour option bears are speculating on more downside ahead of a historically bullish week for MO shares.
Altria stock has explored a bigger-than-usual range of roughly 3 points today, and earlier breached its lower Bollinger Band for the first time since January. At last check, MO is down 2.5% to trade at $54.80, after tumbling as low as $53.29 in intraday trading. The stock is now set to close beneath its 40-day moving average for the first time since February, but remains more than 10% higher year-to-date.
As alluded to earlier, Altria puts are flying off the shelves today. So far, the equity has seen roughly 36,000 puts change hands -- three times the average intraday volume, and more than double the number of calls traded. Most of the action has transpired at the April 54 and 54.50 puts, and with volume exceeding open interest at both strikes, it's safe to assume that at least a portion of the puts are being opened just hours ahead of April options expiration. Those buying the puts to open expect MO to retreat well beneath the strikes this afternoon.
Perhaps those traders are avoiding longer-dated options because Altria has a history of moving higher after Easter. In fact, MO is the only S&P 500 stock that has ended the week after Easter higher 100% of the time in the past 10 years, averaging a gain of nearly 2%.