This Weed Stock Buy Signal Has Never Been Wrong

CRON stock has pulled back to its 200-day moving average again

Oct 23, 2018 at 11:45 AM
facebook X logo linkedin


The shares of Cronos Group Inc (NASDAQ:CRON) topped out at a record high of $15.30 on Sept. 19, as the cannabis craze gripped Wall Street. The weed stock has since retreated from this milestone, and following a quick pop higher last week ahead of Canada's legalization of recreational marijuana, is down 8.2% today to trade at $7.82 -- on track for its fifth loss in six sessions -- after ratings agency DBRS expressed caution on large Canadian cannabis producers and placed a "non-investment grade" on the sector.

cron stock daily price chart oct 23

Not all news is bad news for the weed stock, with CRON shares now trading within one standard deviation of their 200-day moving average. There have been two other times the equity has pulled back to this trendline after a lengthy period of trading above it, and the shares went on to average a one-month gain 39.79%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Another move of this magnitude would send Cronos stock back near $11, based on its current perch.

Options traders, meanwhile, have been positioning for a big bounce. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 2.45 calls for each put over the last two weeks.

Some of this heavy call buying -- particularly at out-of-the-money strikes -- could be at the hands of short sellers hedging against any upside risk. Short interest on CRON rose 9.3% in the two most recent reporting periods to a record high 22.51 million shares.

Whatever the reason, premium on the stock's short-term options is pricing in higher-than-usual volatility expectations at the moment, per CRON's 30-day at-the-money implied volatility of 136.3% -- in the 94th annual percentile. As such, those looking to bet on another potential bounce from the 200-day trendline may want to consider a long call spread, which lowers the cost of entry by combining a bought call with a sold one.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI