Clorox Co’s shares reached a record year high on Monday following the discontinuation of its operations in Venezuela. The company plans on divesting all its assets in the business.
The company decided to stop operations of its affiliate, Corporación Clorox de Venezuela S.A., which had to sell over two-thirds of its products at prices that were frozen by the Venezuelan government. At the same time as the price freeze, there was a significant rise in inflation that resulted in higher costs for the company.
The Clorox Co. affiliate had meetings with government authorities and stated that price hikes would be allowed.
However, Clorox said that the price increases were “nowhere near sufficient” and would force the company to continue selling at a loss.
Brokerage Oppenheimer said:
“The more interesting aspect of this announcement is the potential for it to urge the Venezuelan government to be more conciliatory in its relations with other multi-nationals that have larger operations in the country.”
Shares for the company increased by 7 percent, up to $97.09, and volume on Clorox options soared, with 31,000 calls and 2,750 puts traded today so far.
The most popular options were calls on an 8 percent gain in Clorox by January 17th, according to Thomson Reuters, with 4,700 call positions bought for $1.10 (when the market was between $1.05 to $1.25) at the $105 strike which will expires on Jan 17.
The options analytics firm Livevol Inc said that the 30-day implied volatility of the stock increased by roughly 53 percent at 18.57 percent for Clorox options on Monday.
