How to trade Constellation Brands shares

The next day

It has been more than 24 hours since the ball fell. Constellation Brands (STZ) reported that the numbers were generally good, thanks to the portfolio's strong performance in terms of burnout, which had been driven primarily by the company's beer ranges. (Modelo and Corona) Markets also quickly became aware of improved margins. An increase in the dividend? Oh yes. The action took off at the news. This fourth fiscal quarter (2019) added to the good news that the company had sold about 30 brands of lower quality wines to E & J Gallo Winery for $ 1.7 billion. Constellation had indeed sought to dump this cheaper activity and the timing was perfect. The shares rose … $ 190, $ 191, or $ 192. Could Constellation keep his land? What could go wrong?

On this note

On Friday morning, Deutsche Bank brought STZ back to "Hold" at "Buy", which is quite logical given that Deutsche already had a target price of $ 194 on this stock and that they did not have it. have not changed. Stocks were a little agitated in night trading. They caught an offer. Stable. Right here. Chief Executive Officer Bill Newlands spoke about Canopy Growth (CGC). Noting Canopy's leading position in the Canadian cannabis markets, as well as the potential of beverage and food products, Newlands believes that CGC could generate $ 1 billion in revenue for the year. By the way, Constellation, for those who have forgotten, has a 38% interest in Canopy Growth. Hmm. Thursday's earnings have at least until now been postponed to Friday.

Table

As I explained to Katherine Ross of The street In the video we filmed together, I see the unfinished training of a cup. No handle yet. If we see one, it's probably around $ 201. If. The name has not yet really defeated the $ 191 resistance. A failure at the pivot could produce a slip up to $ 181, but the name does not act like that, at least not yet. The average price goal I see in the industry for this name is close to $ 210.

So … how do we negotiate STZ, Sarge?

I thought you would never ask. There are several ways to strip a potato, so let's go.

And if you …

1) Long entered and need protection …

– May 17 purchase $ 190 met (value: $ 4.85)

– Sale on May 17th at 180 dollars (value: $ 1.70)

Net rate: $ 3.05 … Hey, you're up $ 10 in 24 hours. Peace of mind. You may have to redeem the shares at $ 180 … remains a good trade for capital extraction.

2) bought the stock here …

– Sell your calls from July 19th to $ 210 (value: $ 2.65)

– Sell July 19th $ 185 for sale (value: $ 6.55)

Net credit: $ 9.20 … Poof. Like magic, your net base is now under $ 181, our supposed support level. The catch? You may have to pay $ 185 for the stock in July. Even in this case, if the lots are of equal size, the trader will use a net basis of about $ 183.

3) Showers at risk but still want to play …

– Purchase on July 19th at $ 190 with calls (value: $ 10.10)

– Sell your calls from July 19th to $ 210 (value: $ 2.65)

– Sell July 19th at $ 180 (value: $ 4.75)

Net flow: $ 2.70 .. Now, even one contract at a time, you play a positive potential through a spread call, subsidized by adding equity risk with a discount three months later. or … you could have $ 190 per share for a capital investment.

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