27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Constellation Brands, Inc. Class A (NYSE:STZ) announced Wednesday an agreement to augment its stake in Canopy Growth Corp (NYSE:CGC) from 9.9 percent to 38 percent.
The Analyst
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Reviewing the transaction, Bank of America Merrill Lynch analyst Bryan Spillane reiterated his Buy rating on Constellation Brands, but reduced his price target from $250 to $230.
The Thesis
The expansion of Constellation's strategic relationship with Canopy Growth would increase its exposure to the cannabis market, while also providing funds for the latter, Spillane said in a Aug. 15 note.
The analyst noted Constellation Brands will receive additional warrants exercisable over the next three years, which when exercised would bring the company's ownership in Canopy Growth to 55 percent.
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The increased investment, according to Spillane, means Constellation Brands can not only co-develop beverages but also participate in the development of medical/recreation cannabis on a global scale.
For Canopy Growth, the deal provides the much-needed finance to fund its expansion globally and consolidation in the Canadian market, BofA said.
"In our view, recreational expansion with cannabis based ingredients is likely to draw similar investment from other food/beverage cos," the firm said. Citing addition of interest on $4 billion of debt, the firm lowered its 2019-21 EPS estimates for Constellation Brands.
The Price Action
Constellation's stock, which shed 6 percent Wednesday, was down another 3 percent Thursday around $202.06 per share.
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27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.