Call Traders Make Moves During Cannabis Craze

Call buying has been popular on cannabis stocks TLRY, APHA, and ACB

Jan 10, 2019 at 1:54 PM
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Weed stocks have received plenty of attention in 2019 already, with multiple firms saying they're bullish on the sector for the year. Canopy Growth (CGC) is leading the charge, and options traders are also targeting sector peers Tilray Inc (NASDAQ:TLRY), Aphria Inc (NYSE:APHA), and Aurora Cannabis Inc (NYSE:ACB). Below is a brief breakdown of today's call activity on TLRY, APHA, and ACB.

TLRY shares are up 2.7% at $81.50, holding just below their 50-day moving average. Calls are crossing at 1.6 times the expected pace for this point in the day, with volume running in the 74th annual percentile. The January 2019 90-strike call has seen the most activity so far, followed by the weekly 1/11 85-strike call, with new positions confirmed at the latter.

For APHA, the shares have popped 2.1% to $9.11, eyeing their highest close since an early December bear gap. Most of the options activity today has taken place at the January 2019 7.50-strike call, while the 5-strike call from the same series has seen heavy volume, too. However, these strikes were already home to the top two open position levels coming into today, so there's a chance traders are closing positions.

ACB stock, meanwhile, is trading up 9.6% at $7.76, trying for its first close above the 50-day moving average since October. In fact, a major rally attempt in early November was notably blocked by this trendline. The January 2019 6-strike call -- the second most populated strike coming into today -- is seeing the most volume. Peak open interest on Aurora Cannabis sits at the March 7.50-strike call.

Looking back, all three of these weed stocks have seen call buying easily outpace put buying in recent weeks, according to International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) data. Still, if you go by their 30-day at-the-money implied volatility readings, volatility expectations don't seem to be running too hot on any of these names, despite the increased attention.

weed stocks jan 10


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