Lorillard (LO - option chain) shares are rising today after an FDA panel wrote in a draft report that it will not recommend an outright ban on menthol cigarettes. Most of LO's sales come from menthol products, unlike its main competitors Altria (MO) and Reynolds American (RAI). Investors had feared the FDA would move to ban menthol cigarettes, but that is looking less likely now, even though the panel did say removing menthol from the shelves would benefit public health. 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 LO.

LO opened this morning at $80.01. So far today the stock has hit a low of $79.30 and a high of $88.17. As of 12:15, LO is trading at $85.67 up 6.89 (8.8%). The chart for LO looks bullish and S&P gives LO a positive 4 STARS (out of 5) buy ranking.

A Harvard report was release this week that again is setting the tobacco world on fire. Well, at least figuratively. In the report, the compound Menthol was the focus, and it was concluded that by varying the amount of it in certain brands of cigarettes, tobacco companies could recruit and keep younger smokers and those who may have had an initial bad reaction to smoking upon starting the habit.

The strategy was to "lock in lifelong adult smokers," said the researchers at the Harvard School of Public Health. After all the past shenanigans that the tobacco industry has admitted to, it's not surprising to hear that using a varying chemical level strategy to recruit smokers and get them hooked was tried. It was found that milder cigarette brand with lower menthol levels were more appealing to younger smokers. hence, these products were marketed to that age group as a result, according to the report.

One particular example cited was the strategy Philip-Morris USA used when it introduced "Marlboro Milds" back in 2000. The product instantly became a hit with younger smokers was responsible for almost 80% of the menthol product category sales for the company that year.