Constellation Brands options positioning signals near-term bearish bias

Constellation Brands Inc. (STZ) is trading at $120.11, its lowest point in 52 weeks, as of Sep 18, 2021. The options market provides a mixed signal, with a notable $190 March 2027 call contract accounting for 71.8% of total call volume. This aggressive, long-dated bet on a dramatic recovery shows significant growth in open interest.

The market's reduced fear is evident in the lower implied volatility and compression in the 90/110 skew. However, the put side shows deliberate positioning, with the Jan. 15 $120 put strike seeing an unusually high level of open interest given the date. While the overall put/call ratio is slightly call-heavy, this is mainly due to the single massive March $190 call block.

Strip that trade out, and the tape shifts decisively bearish. The market is signaling two directions - low stock price and high short-term volatility, leading to a bearish outlook for the near term.