Weed Stock With Options on Sale

Short-term CRON options are attractively priced at the moment

Managing Editor
Mar 6, 2019 at 11:45 AM
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Cronos Group Inc (NASDAQ:CRON) stock has been red-hot in 2019, already more than doubling in value and nabbing a record high of $25.10 on Feb. 4. Today, CRON is taking a breather, last seen down 3.2% to trade at $22.30. If history is any guide, though, Cronos options traders may want to set their sights on more record highs for the weed stock.

Specifically, the stock's Schaeffer's Volatility Index (SVI) of 75% ranks in the 15th percentile of its annual range. This indicates short-term options are cheap, from a volatility perspective. What's more, per data from Schaeffer's Senior Quantitative Analyst Rocky White, the one other time CRON was trading within 2% of a new 52-week high while its SVI was ranked in the bottom 20th percentile of its annual range, the equity averaged a whopping one-month gain of 42.11%. A similar jump from current levels would put the equity at a fresh record high of $31.69 by April.

Plus, CRON's recent dip was quickly contained by the its 20-day moving average, and a round of bullish brokerage notes could fuel a bigger bounce from here. Most analysts are skeptical of the cannabis name, with three of five in coverage maintaining a tepid "hold" recommendation. Just yesterday, in fact, Cowen came forward with a lukewarm "market perform" rating. 

Daily Stock Chart CRON

In the options pits, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 0.67, which ranks in the elevated 86th percentile of its annual range. While this indicates that bought calls have outnumbered puts on an absolute basis, the elevated percentile ranking tells us the rate of put buying has been faster than usual in the past two weeks. A shift in sentiment from options traders could also create tailwinds for CRON.

 

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