Canopy Growth Corp (NYSE:CGC) is trading 6.2% higher today at $27.83, after the company announced it's been approved in Canada to perform a drug trial testing the effect of medical marijuana on anxious animals. This news has CGC options volume soaring, with call volume nearly doubling the daily average.
So far today, more than 8,600 CGC calls have changed hands, compared to just over 700 puts. The daily put/call ratio of 0.08 is on track for an annual low. Digging deeper, the August 25 and 30 calls are seeing heavy trading, as is the January 2019 30-strike call, as traders are seemingly speculating on more upside for the shares.
Looking back, the call activity isn't all that unusual, since more than 22,000 calls have been purchased during the past 50 days across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to fewer than 3,000 puts. Some of this call buying -- particularly at out-of-the-money strikes -- could be connected to Canopy Growth's high short interest ratio of 7.1, as shorts may be using options to hedge against near-term upside. Overall, 10% of the security's float is held by short sellers.
Checking in on analysts, the outlook seems bullish, with the stock's average 12-month price target coming in at $41.22. This represents record-high territory for the shares, which traded as high as $36.55 back in late June, after sitting at just $7 this time last year. In the meantime, CGC is on pace to take back its 20-week moving average.
