Options Trading News

Ambev is pulling back after a nice run, and the bulls are stepping in.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,650 June 42 calls for $0.30 and the sale of an equal number of June 35 puts for $0.30. Volume was above open interest at both strikes.

The trade cost nothing to open and is similar to buying shares in the Brazilian beverage company. If it climbs, the long calls will appreciate, while the short puts will lose value in the event of a decline. The main difference between the position and common shares is that it will track ABV less closely as time passes and become worthless if the stock remains between $35 and $42 on expiration. (See our Education section)

ABV is down 0.31 percent to $38.64 in morning trading. It climbed from about $32 to over $44 between late November and late March but has been falling since then. In the last week, the shares have been holding support around the same level where they peaked in early February and then bounced later in the month. That could be leading some chart watchers to believe that it will now provide support.

The company has benefited from steady growth in earnings and volumes, fueled by strong market positions for its various brands of beers and soft drinks.

Today's bullish trade pushed total option volume in ABV to 5 times greater than average.