Weed Stock Making Noise on BUD Partnership

Tilray is teaming up with Anheuser Busch Inbev for weed-infused drinks

Dec 20, 2018 at 10:11 AM
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The shares of Tilray Inc (NASDAQ:TLRY) are up 7.4% to trade at $76.25, after the company announced a $100 million joint venture with Anheuser Busch Inbev NV (NYSE:BUD) to research THC- and cannabinoid-infused beverages in Canada. The country, which legalized recreational pot in October, is expected to approve weed-based drinks and edibles in October 2019. It's just the latest marijuana partnership for Tilray, which announced a medical marijuana deal with pharma name Novartis AG (NYSE:NVS) earlier this week.

TLRY stock skyrocketed to an all-time high of $300 in mid-September, as weed stocks rallied ahead of the aforementioned Oct. 17 legalization date in Canada. However, the momentum didn't last, with the shares ultimately backpedaling beneath support in the $95-$100 region -- also a 61.8% Fibonacci retracement of TLRY's opening-day close of $22.39 and Sept. 19 all-time closing high of $214.06.

Amid the stock's slide, it's no surprise to find that options buyers have preferred bearish bets lately. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.23 indicates that traders have bought to open more Tilray puts than calls in the past two weeks.

The deep in-the-money January 2019 125-strike put saw the biggest increase in open interest, with nearly 2,400 contracts added during this time frame. Data suggests a healthy portion of the puts were, in fact, bought to open. By purchasing the puts, the traders expect TLRY to extend its recent retreat beneath the $125 level through the next several weeks.


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