As of Tuesday, you'll have to cross a border to buy a clove. The U.S. Food and Drug Administration's ban on flavored cigarettes went into effect and prohibits the sale of candy and fruit-flavored cigarettes. Authorized under the Family Smoking Prevention and Tobacco Control Act, the measure is intended to reduce the number of children who take up the habit.

Under the new ban, cigarettes that include "an artificial or natural flavor (other than menthol) or an herb or spice" cannot be sold in the United States. The long, but not exhaustive list of flavors, consists of strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry and coffee.

Last week someone asked me to go on TV to talk about the future of newspapers based on my comment on how to save the Boston Globe. It's clear to me that there are many people who like to read a newspaper with their morning coffee. 50 years ago, there were plenty of people who used to read that newspaper with a coffee and a cigarette. Today, fewer people take all three at breakfast time. (In 1944, 41% of Americans polled were smokers, 21% were in 2007). Will dead-tree-news (DTN) go the way of the cigarette? In some ways, yes.

Cigarettes and DTN are different. When cigarettes are used as directed they kill their users. When DTN is printed and distributed, it kills its owners -- or to be more precise, it loses money which is increasingly forcing its owners to choose between closing DTN down or absorbing its losses. Another difference is that the generation that's addicted to DTN will not keep reading forever; whereas cigarette makers are skilled at recruiting new addicts to replace the ones it kills.

But cigarettes and DTN also will likely have something in common. As the number of smokers has steadily declined in the U.S., the cigarette makers have skillfully raised prices to cover the higher unit costs and profit expectations. In 1960, a pack of cigarettes went for $0.35, today the price is up as high as $9. As I posted, DTN is clearly a money loser so its owners are going to have to raise its price if they hope to at least cover the costs of printing and distributing it to people.

Altria (NYSE: MO - option chain) shares have slid lower today after the US Supreme Court ruled against the Phillip Morris USA in a "light" cigarette case. The ruling allows MO to be sued for deceptive advertising of light cigarettes, which in reality are no better than normal ones. If you think that the stock won't rise by too much in the coming months, then now could be a good time to look at a bearish hedged trade on MO.

This morning, MO opened at $15.71. So far today the stock has hit a low of $14.96 and a high of $15.88. As of 12:40, MO is trading at $15.26, down 8 cents (-0.5%). The chart for MO looks bullish and S&P gives MO a positive 5 STARS (out of 5) strong buy ranking.

For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $18 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in three months as long as MO is below $18 at March expiration. Altria would have to rise by more than 17% before we would start to lose money.

MO hasn't been above $18 since early November and shown resistance around $16 recently.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in MO.

Altria (NYSE: MO) shares are trading higher today, getting a boost from news that menthol is getting special protection in a new bill as Congress attempts to regulate the tobacco industry. Menthol brands, which make up about one-fourth of the US tobacco output, is getting an exemption from a ban on cigarette flavoring like cinnamon and clove. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MO.

After hitting a one-year high of $79.59 in January, the stock spun-off Phillip Morris International (NYSE: PM) in March and hit a one-year low of $19.95 early this month. MO opened this morning at $21.57. So far today the stock has hit a low of $21.50 and a high of $21.94. As of 1:00, MO is trading at $21.85, up $0.27 (1.2%). The chart for MO looks bearish and steady, while S&P gives the stock its highest 4 Stars (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 19.0% return in just four and a half months as long as MO is above $20 at September expiration. Altria would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.

Altria Group (NYSE: MO) shares are trading higher after the company announced it is cutting promotional discounts and raising prices on cigarette brands starting today. This move was made to stem losses from lower cigarette volumes. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MO.

After hitting a one-year low of $19.47 in July, the stock hit a one-year high of $24.55 in January. MO opened this morning at $20.75. So far today the stock has hit a low of $20.50 and a high of $20.86. As of 12:40, MO is trading at $20.79, up $0.36 (1.7%). The chart for MO looks bearish but improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $19 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 26% return in just four and a half months as long as MO is above $19 at September expiration. Altria would have to fall by more than 8% before we would start to lose money.

MO hasn't been below $19 at all in the past year and has shown support around $20 recently. This trade could be risky if investors rotate out of historically defensive stocks, but even if that happens, this position could be protected by the support the stock might find around $20, where it bottomed out both this past week and back last fall.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither controls bullish hedged positions in MO.

Congressional Democrats looking to spend an additional $35 billion on health coverage for children are drawing criticism for the method they've selected for funding the program: An increased tax on cigarettes. The program would increase the tax from 39 cents per pack all the way up to $1.

Given that smoking is more common among lower-income Americans, the tax is seen as regressive: Health coverage for children will come out of the pockets of those who can't afford it.

America's biggest tobacco company, Altria Group Inc. (NYSE: MO), announced its plan today to spin off its Philip Morris International unit. After the completed spinoff, Altria will be left with a much smaller domestic business, but it will still rank as the biggest in the country.

A big reason for the spinoff is that it will allow the overseas manufacturer to operate in an environment free from legal and regulatory restrictions that the domestic Phillip Morris USA is forced to operated under.

By spinning off this portion of the business, it is hoped that the overseas cigarette maker will be able to have greater success in growing its sales in emerging markets. While the plans seem pretty set in stone right now, there will not be any finalized approval and terms to the spin off until the company's next board meeting, scheduled for January 30.

The Family Smoking Prevention and Tobacco Control Act, to be voted on today by the Senate Health Committee, seems on the fast track to approval. If passed into law it will place the tobacco industry under the oversight of the Food and Drug Administration. The measure, supported by health groups and some of the industry, will give the agency some broad powers in regulating the contents and sales of tobacco products.

Industry heavyweight Altria Group's (NYSE: MO) Phillip Morris favors the bill, but others such as Reynolds American's (NYSE: RAI) R.J. Reynolds oppose it, claiming the regulations would limit its ability to compete with the market leader.

The Philip Morris USA unit of Altria Group (NYSE: MO) has decided to launch a smokeless product under the Marlboro name. It is a substantial risk.

Forty percent of the cigarettes sold (WSJ--subscription required) in the U.S. are Marlboros. The brand still evokes the tough cowboys who used to ride through its TV commercials. They rode the open American range, they were independent, and when they died of lung cancer, it was off-screen.

The new product can be used in offices and restaurants since it does not violate any of the smoking laws enacted in recent years. The product is not "wet" like certain other forms of smokeless tobacco. The users are not likely to spit juice all over the floor. Hitting a spitoon is a lost art.

But, smokeless tobacco can cause mouth and throat cancer, a particularly grim way to die.

Sucking nicotine in through a little pouch placed in the mouth would seem to erode the strong cowboy image. Of course, it will kill you all the same.

Douglas A. McIntyre is a partner at 24/7 Wall St.

A federal judge today granted a group "class action" status in a suit that claims the cigarette companies fooled customers by calling some of their products "light." The argument is simple: The big tobacco companies were trying to sell "light" as safer. Smokers figured that it was OK to have a coffin nail if it was manufactured with less poison in it.

The suit seeks up to $200 billion in damages. If the plaintiffs can show that the tobacco companies planned the whole thing, the suit might take on racketeering status, which could triple damages.

Altria Group (NYSE: MO), the parent of Philip Morris, watched its stock drop almost 5% on the news, down to $78.64 as of 1:55 PM. The company has been trading near its 52-week high of $85.00.

With such a big suit, what isn't Altria's stock down more? Because suits filed in the past seeking damages for heath issues arising from smoking have not won big damages from the tobacco companies. Courts and juries have been reluctant to blame the cigarette manufacturers for people's bad habits, especially when each cigarette package says that smoking will kill you faster than stepping in front of an oncoming train.

While all large suits represent some risk, Wall Street is clearly not betting that there will be a full reversal of the way the judicial system views the liabilities involved in cigarette smoking. Tobacco may be a dirty business, but so far, the actions of cigarette companies are not viewed as criminal.

Douglas McIntyre is a partner at 24/7 Wall St.