Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

This week we feature Anheuser-Busch Inbev SA (Ticker: BUD) as they try to right the wrongs of the marketing campaign they ran. 

Whether you like it or not, it hasn’t been good for BUD’s stock price and sent a relatively quiet stock into Vol Orbit.

3 month BUD chart with 30 day realized vol on the bottom

I would guess BUD is the only stock in the SPX that realized vol went up the last few months.

Let’s see what the options are doing.

To be honest I would have thought BUD’s longer term 180 IV would be a bit higher than where it is. This is essentially 6 month option premiums.

The market, at least long term, is not providing a lot of volatility to sell.

I will say, it’s higher than normal for sure. In the current lower IV market, that’s saying something.

My go-to would be the 1 x 2 put spread in this area for yield – buy 1 put close to the money and sell 2 OTM and pick up the credit or the stock.

It might provide enough to make the trade worthwhile and pick up BUD at lower prices if it keeps going down. Seeing the IV a bit less, I think the market is pricing a bounce will take a bit longer than people expect.

To Your Trading Success,

AG