Options Traders Blast the Latest Surging Weed Stock

PYX stock hit a new annual high earlier

Oct 2, 2018 at 3:12 PM
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The shares of Pyxus International Inc (NASDAQ:PYX) are surging today on news its indirect subsidiary, Goldleaf Pharm, was -- alongside Tilray (TLRY) -- awarded a medical cannabis cultivation license from Health Canada. PYX stock is up 18.7% at $27.50, fresh off a four-year high of $30.76, and options traders are targeting even more upside.

At last check, 3,203 calls and 1,076 puts have changed hands on PYX, three times what's typically seen, and total options volume at a new annual peak. The October 30 call is most active, and all signs suggest new positions are being purchased here for a volume-weighted average price of $3.22. If this is the case, breakeven for the call buyers at the close on Friday, Oct. 19 -- two days after Canada legalizes weed -- is $33.22 (strike plus premium paid), territory not charted since August 2013.

Amid the stock's surge today, short-term volatility expectations have skyrocketed, with PYX's 30-day at-the-money implied volatility (IV) of 170.6% at a new 52-week peak. Meanwhile, the equity's 30-day IV skew of negative 0.5% ranks in the 86th percentile of its annual range, indicating short-term calls are pricing in lower volatility expectations than their put counterparts.

Today's upside just continues PYX's rally off its late-July lows near $13.50. However, the $29-$30 region is rearing its ugly head as resistance once again, with this neighborhood halting rally attempts in March and April. Year-to-date, Pyxus International stock is up 106.6%.

pyx stock daily chart on oct 2


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