Back in August, I wrote about the 23 state attorneys general that were taking a look at alcoholic energy drinks, concerned that consumers weren't being warned about the dangers of mixing caffeine with beer. Studies have shown that caffeine can lead intoxicated individuals to believe that they are well enough to drive, and can also mask some of the symptoms, fooling those around them as well.

Now Anheuser-Busch (NYSE: BUD) has received subpoenas from New York, Maine, Maryland, Arizona, and Iowa while SABMiller Plc. has received subpoenas for documents from Illinois, New York, Iowa, Maine, and Maryland.

In one of the more idiotic defenses I've seen in awhile, Anheuser-Busch released a statement saying that "If the Attorneys General truly believe that, despite the state and federal regulatory approvals, alcohol and caffeine should not be mixed, then they should use their powers to persuade these authorities to regulate or ban all such beverages, not just the lower-alcohol, prepackaged ones,"

What? Isn't that kind of like saying that the police shouldn't crack down on people selling crystal meth because you can buy all the products you need at the grocery store? Not that I would know ... but if Anheuser-Busch is marketing a product that contains a chemical combination that is more dangerous than the sum of the parts and consumers aren't aware of that, it's worth investigating.

Hansen Natural (NASDAQ: HANS) implied volatility Flat as HANS near record high. HANS markets and distributes beverages. HANS has a market cap of $4.69 billion. Goldman Sachs says "we continue to be optimistic about the company's prospects for the full-year and into 2008 based on; 1) distribution benefits from the Anheuser Busch (NYSE: BUD) agreement, and 2) the positive early read on the newly launched Java Monster." HANS October option implied volatility of 43 is near its 17-week average according to Track Data, suggesting non-directional price risk.

Cott (NYSE: COT) volatility Elevated as COT sells off 18% on lower guidance. COT, a supplier of retailer brand beverages, is recently down $1.89 to $8.27.COT lowered financial guidance, citing weaker than expected volumes and higher input costs. BMO Capital Markets says "if there is good news, it is that some degree of the profit warning may already be priced into the share price." COT announced on 4/13/07 "COT has responded to interested parties that have approached the Company, and is exploring the potential benefits of participating in possible industry consolidation." COT October option implied volatility of 56 is above its 26-week average of 40 according to Track Data, indicating larger price fluctuations.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

28 state attorney generals, along with the District of Columbia and Guam, are going after the manufacturers of "alcoholic energy drinks".

According to the St. Louis Post-Dispatch, Anheuser-Busch's Bud Extra, Miller's Sparks, and Liquid Charge and Liquid Core from Charge Beverages of Oregon are among the drinks being targeted.

The lawmen are concerned that consumers are not being advised of the risks of combining alcohol with caffeine. Studies have shown that caffeine can lead intoxicated individuals to believe that they are well enough to drive, and can also mask some of the symptoms, fooling those around them as well.

For now, sales of these beverages are not a large enough portion of sales for the big alcohol companies for the suit to be a concern for investors.