Weed Stock Adds to Big April Gains

CGC and INNT are seeing heavy options volume today

Apr 29, 2019 at 2:41 PM
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It's a relatively quiet day on Wall Street, though the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) are fresh off new all-time intraday highs. There are several individual stocks making big moves, including cannabis name Canopy Growth Corp (NYSE:CGC), data center specialist Switch Inc (NYSE:SWCH), and clinical stage biotech Innovate Biopharmaceuticals Inc (NASDAQ:INNT). Here's a quick look at what's moving the shares of CGC, SWCH, and INNT.

Canopy Growth Stock Jumps on Hemp Industrial Park Update

Canopy Growth stock is up 3.4% to trade at $51.63, on news the company secured a 308,000 square foot facility in Kirkwood, New York, as part of establishing its larger Hemp Industrial Park. This follows last week's announcement that CGC gained the right to purchase U.S.-based pot firm Acreage Holdings once recreational marijuana is legalized nationwide, and has the weed stock on track for an April gain of 19%.

It looks like one trader today expects CGC stock to stall near current levels. Shortly after 11 a.m. ET, a 10,000-contract block of October 52.50 calls may have been sold to open for $6.75 apiece. If this is the case, the call writer gets to keep the $6.75 million credit collected should the stock stay south of the strike through October options expiration. Meanwhile, losses for an un-hedged trader are theoretically unlimited should the security break out to the upside.

FedEx Partnership Fuels More Upside for Switch

Switch shares were up 4.4% earlier, but have since pared this to a slimmer 0.9% gain at $10.85. The positive price action comes after the company inked a 10-year deal with FedEx (FDX) to serve as the shipping giant's western U.S. data center.

SWCH stock is now up 55% year-to-date, and short sellers are likely feeling the heat. The 9.36 million Switch shares sold short represents 16.9% of the security's available float, of 5.9 times the average daily trading volume. A capitulation from some of the weaker bearish hands could keep the wind at the equity's back.

Innovate Biopharmaceuticals Erases Big Gains to Hit New Low

Innovate Biopharmaceuticals stock jumped more than 26% out of the gate, after the company reported positive pre-clinical data for its experimental non-alcoholic fatty liver disease (NASH) treatment when used in combination with obeticholic acid. However, the shares have since swung down 15.9% to trade at $1.60 -- fresh off a 15-month low of $1.52 -- after pricing a newly announced $8.7 million direct offering at $2.025 per share.

The volatile trading has speculators pouring into INNT's typically empty options pits, with 1,446 calls on the tape so far -- 31 times what's typically seen at this point. The May 2.50 call is most active, though it's not clear if the options are being opened or closed. Meanwhile, new positions are being initiated at the November 5 call, with the bulk of the action occurring on the ask side.


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