Altria Has Traders Taking A Smoke Break In The New Year

Altria Unusual Option Activity Report

What a crazy start to the new year. The unusual option activity in Altria is fitting. I say fitting in that after 2020, many people are looking at something to calm the nerves and take a break from the chaos. As we deal with election news, many may be looking to take up smoking. Over the past two days, traders have been doing so through purchasing call options on Altria Group Inc. (MO).

In early December, it looked like tobacco companies like Altria, Philip Morris (PM), Vector Group (VGR), and Turning Point Brands (TPB) were poised to take off. However, Santa didn’t come for these companies and their share prices fell heading into the new year. Yet that has changed for VGR and TPB, as their share prices are surging today. Also, the bullish option activity in MO is picking up steam.

Altria Option Activity

The options volume is sizzling on MO today. At the time of this writing, it was over three times the average so far. Most of the volume is occurring on the calls, as the volume is over 4.5 times the five-day average. The put to call ratio is 0.095. The call volume has had 55% of the trades occur at the ask price, which is reflective of call buying activity. Here’s a look at the significant activity over the past two days.

  • Jan. 5 — 2,500 29 JAN 21 $44 calls mostly BOT @ $0.30 to $0.36 against open interest of 537.
  • Jan. 6 — 22,000 29 JAN 21 $44 calls mostly BOT @ $0.29 to $0.38 against open interest of 3,208.

The activity over the past two days has been bullish and is looking for a near-term move in Altria to $44 or higher. The option expiration also aligns with the earnings announcement for the company on the same date before the market opens.

Altria Technicals

The stock price of Altria failed to breakout above the $44 resistance from August. The high day of Dec. 18, 2020 closed near the high of the session on significant volume before falling back to its $40 support. The coincidence of the $44 strike price aligning with the resistance at the same price is interesting. The option activity is anticipating a breakout above that level.

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