Call Trading Hot on Cronos Group Stock

The weed stock bounced off its 50-week moving average in mid-August

Managing Editor
Sep 24, 2018 at 1:26 PM
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Weed stock Cronos Group Inc (NASDAQ:CRON) has seen heavy options trading in recent weeks, landing on Schaeffer's Senior Quantitative Analyst Rocky White's list of 20 stocks that have attracted the highest amount of weekly options volume during the past 10 trading days. As you can see, CRON is highlighted in yellow, meaning it's the only name to be added since the last time the study was run.

MOA Weekly Options Chart Sept 24

Cronos Group is extending the recent hype in marijuana stocks, hours after drug concern Intrexon (XON) it announced its own leap medical cannabis field. Though last seen 4% lower at $12, CRON had been moving higher on the charts since bouncing off the supportive 50-week trendline in mid-August, and just last week touched a record peak of $15.30. From a broader perspective, shares of Cronos stock have more than quintupled over the past 12 months.

Weekly Chart of CRON with 50MA

Digging into options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), shows call options traders have been flocking toward the cannabis stock. This is shown in CRON's 10-day call/put volume ratio of 2.34, which means call buying has more than doubled put buying during the past two weeks of trading.

During this same time frame, the October 14 call has seen one of the highest increases in open interest, with just under 5,000 options added. Plus, data suggests a majority of these contracts have been bought to open, meaning many options traders believe CRON stock will surge to the $14 mark by the option's expiration on October 19. 

Lastly, short interest surged 26% during the past two reporting periods, and now represents nearly 14% of the total available float. While 20.59 million shares are still sold short, it would take less than a day for shorts to buy back their bearish bets.

 

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