Pot Stock Takes a Breather After Revenue Miss

Options traders are bombarding the equity after the event

Assistant Editor
Oct 7, 2021 at 10:30 AM
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The shares of Canadian pot producer Tilray Inc (NASDAQ:TLRY) are down 1.8% to trade at $10.60 this morning, after the company's fiscal first-quarter revenue fell short of analysts' estimates, despite jumping 43% year-over-year thanks to strong demand for weed products following pandemic-related lockdowns. Meanwhile, Tilray's quarterly losses of 8 cents per share were in line with expectations.

The security is already getting blasted in the options pits. So far, 61,000 calls and 24,000 puts have crossed the tape -- four times the intraday average. Most popular by far is the weekly 10/8 12-strike call, followed by the 11-strike call in the same series. This means options traders are expecting upside for TLRY by tomorrow, when these contracts expire.

There has been a healthy appetite for bullish bets over the past two weeks. This is per the stock's 10-day call/put volume ratio of 8.61 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 80th percentile of its annual range. This means calls have been getting picked up at a quicker-than-usual pace.

Options look like the way to go for those wishing to speculate on TLRY. The security's Schaeffer's Volatility Index (SVI) of 99% stands higher than just 9% of readings from the past 12 months, indicating options players are pricing in low volatility expectations right now. Plus, Tilray stock's Schaeffer's Volatility Scorecard (SVS) ranks at 79 out of 100, suggesting the equity has exceeded options traders' volatility expectations in the last year -- a boon for buyers. 

Tilray stock has struggled since surging to a Feb.10, two-year high of $67. The 40-day moving average has been guiding the shares lower since July, eventually pushing them below the $12 level for the first time since January. Over the last six months, the stock has shed just 46.2%.

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