Buying the Dip in Constellation Brands Dear Savio, We love taking advantage of profit taking on our favorite stocks. There's nothing better than seeing a fundamentally sound stock in a strong long-term uptrend start pulling back because some investors are taking profits off the table. It's the best time to enter new bullish trades. That's exactly what we're seeing with Constellation Brands (STZ). Wall Street pushed the stock higher heading into the company's earnings announcement on June 30th, before market open. Now investors are cashing in on that recent bounce. 
With the stock pulling back toward both the up-trending support level at $224 and the horizontal support level just above $220, we think now is the perfect time to sell puts in anticipation of a strong support bounce for the stock. We recommend you… 'Sell to open' the STZ August 6th $220 Put Write (STZ210806P00109000) for a minimum price of $2.25. NOTE: With a wider bid/ask spread on these options, using a limit order is going to be crucial if you want to ensure a good fill price on your trade. Why are we confident in the support bounce? Even though STZ missed non-GAAP earnings estimates for last quarter by $0.02 per share -- coming in at $2.33 per share -- the company set its earnings estimates higher for the coming year. It also announced it is going to be buying back 2.2 million shares of stock. This should help increase earnings per share (EPS). We chose the $220 strike price because it lines up nicely with the stock's horizontal support level. Here's How the Trade Can Work Out…
Instant income: With this put sell, we plan to collect an instant income payment of at least $225 per contract. Puts expire out of the money: If STZ's stock price remains above our $220.00 strike price at expiration on August 6, the puts will expire worthless, allowing us to keep the $225 per contract we receive for selling this option. That’s a return of 5.6% in just 30 days, or an annualized return of 94.4%. Puts expire in the money: If STZ's stock price is below our strike price at expiration, you will be "put" 100 shares of STZ at a cost basis of $217.75 ($220.00 strike price - $2.25 option premium). That's a discount of 4.4% below the current market price. Taking possession of the shares will then allow us to write covered calls against the stock for additional income. If you do not want to take possession of the stock, you will need to "buy back to close" the put before expiration on August 6. We'll keep you posted as the trade progresses. | Constellation Brands (STZ) common stock was trading for approximately $227.73 per share at the time of this alert. Long-Term Focused Strategic Positions: If you haven’t already entered the following and can still get in for a price at, or better than, our recommended minimum/maximum, we still recommend entering: - Put Write: (Short) VIAC July 30th $40 Put Write (VIAC 210730P00040000)for a minimum price of $0.70.
- Put Write: (Short) SBUX July 30th $109 Put Write (SBUX210730P00109000) for a minimum price of $1.80.
- Put Write: (Short) LOGI July 16th $120 Put Write (LOGI210716P00120000) for a minimum price of $1.60.
- Covered Call: (Short) TTWO July 23rd $192.50 Covered Call (TTWO210723C00192500) for a minimum price of $0.75.
- Covered Call: (Short) CHGG July 16th $85 Covered Call (CHGG210716C00085000) for a minimum price of $0.95.
We are still holding the following strategic trades, but either the current value of the short option or the price action of the stock itself don't warrant entering a new trade at this time. If you haven't already entered these trades, we recommend waiting until further notice before opening a new position: - Covered Stock: (Long) CHGG March (CHGG) -- part of the CHGG covered call position.
- Covered Stock: (Long) DIS April (DIS) -- part of the DIS covered call position.
- Covered Stock: (Long) MU March (MU) -- part of the MU covered call position.
- Long Stock: (Long) LUV July (LUV) for a maximum of $57.00.
- Covered Stock: (Long) TTWO March (TTWO) -- part of the TTWO covered call position.
If put-writes and buy-writes are new strategies for you, be sure to check out our Resources page for more information. For more on these trades, be sure to attend our next weekly webinar Wednesday 8 p.m. ET. Sincerely, 
John Jagerson and Wade Hansen
Editors, Strategic Trader
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abciXgnoswo Jennifer Williams https://wakelet.com/wake/6uWEHKnIJrR1oGBmcojW_
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