Altria (MO) has been volatile after the FDA announced plans to cut nicotine levels in cigarettes: This volatility makes option strategies more compelling due to higher option premiums, I'll showcase two of those strategies in this article.

Altria lost about twelve percent of its value over the last couple of days, which is due to fears about how the FDA's plans for lower nicotine levels in cigarettes could hurt the company's future profits and cash flows.

I believe that Altria will likely not be hurt meaningfully in the long run, due to a couple of reasons, such as the rise of reduced risk products (such as iQOS / Heatsticks), which should see additional demand once the FDA's plans are put in place. Philip Morris (PM), Altria's ex-US counterpart, is seeing a very successful rise of its iQOS products, which are already commanding double digit market shares in countries such as Japan. Once these products are coming to the market in the US as well, Altria can focus its strategy on getting its customers to use these products instead, which should result in a revenue stream that is not threatened by the new FDA plans -- after all the FDA is going for cigarettes, as combustible products are the most risky way to consume tobacco.

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