Tilray Options Traders Call Short-Term Bottom

TLRY options are attractively priced at the moment

Managing Editor
Nov 20, 2019 at 11:57 AM
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Weed stock Tilray Inc (NASDAQ:TLRY) is up 5.2% at $21.02 today, and the mini-rally has options traders coming out of the woodwork. It's not to bet on more losses though, and it appears some traders are calling a bottom on the struggling cannabis concern. 

More specifically, calls are being traded at 1.7 times the average intraday amount today, while call volume more than triples the number of puts traded. Leading the charge are the weekly 11/22 22- and 21.50-strike calls, with new positions are being opened at the latter. These call buyers are expecting more upside from the weed stock by Friday, when the options expire.

This appetite for calls is nothing new, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) AMZN's Schaeffer's 10-day call/put volume ratio of 2.21 ranks in the 70th percentile of its annual range. This suggests a much healthier appetite for calls over puts of late. However, given that 36.2% of the stock's total available float is controlled by short sellers, it's possible some of that call buying could be shorts seeking an options hedge against any unexpected upside.

Now actually looks like a nice time to buy premium on TLRY too, as its Schaeffer's Volatility Index (SVI) of 74% ranks in the 24th annual percentile, hinting at low volatility expectations at the moment.

Despite today's upside, Tilray stock remains awfully close to its Nov. 15 record low of $19.41. The shares have taken a 70% haircut in 2019, with their 30-day moving average keeping a lid on breakouts since August. As a result, it's no surprise that 13 out of 18 analysts rate Tilray a "hold" or "strong sell."

Daily Stock Chart TLRY

 
 

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