Say No to This Weed Stock

TLRY has run up to a historically bearish trendline

Managing Editor
Jan 21, 2020 at 12:43 PM
facebook twitter linkedin

The last time we checked in with Tilray Inc (NASDAQ:TLRY), it was New Years Eve, and options traders were blasting the weed stock's recent bottom. Fast forward three weeks, and TLRY has rallied into a trendline that has historically bearish implications for the next month. 

More specifically, Tilray stock is trading within one standard deviation of its overhead 80-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two similar run-ups to this trendline have occurred in the last three years. One month after these signals, TLRY was lower by an average of 25.6%, with both returns negative.

Daily Stock Chart TLRY

At last check, Tilray stock was up 4% to trade at $21.29, so a drop of similar magnitude would mean nearly all of the stock's 27.3% year-to-date gain would be erased by next month. Year-over-year, the shares have taken almost a 72% cut. And if that's not enough, TLRY's 14-Day Relative Strength Index (RSI) currently sits at 64, on the cusp of overbought territory -- further reinforcing the case for an imminent pullback.

Among options traders, there's a big appetite for calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TLRY's 10-day call/put volume ratio is perched at 6.84 and ranks 1 percentage point from an annual high. However, considering a whopping 48.2% of the equity's total available float is sold short, its possible some of these calls could be shorts hedging against any upside risk.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1