Options Bulls Bet on Cronos Stock Before Earnings

Cronos calls are running at double their average intraday volume

Deputy Editor
Mar 26, 2020 at 3:29 PM
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With its quarterly earnings report due out after the close next Monday, March 30, options bulls have started paying attention to marijuana concern Cronos Group Inc (NASDAQ:CRON). So far, 29,000 calls have crossed the tape, which is double what's typically seen at this point, compared to 2,916 puts. Most of this bullish attention is being focused at the April 7 call. Meanwhile, positions are being opened at the weekly 3/27 6.50- and 7- strike calls, which expire tomorrow. 

At the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a tendency towards calls has been the norm lately. During the last 10 weeks, 5.01 calls have been picked up for every put. Furthermore, This ratio sits in the 94th percentile of its annual range, suggesting a heavier-than-usual appetite for bullish bets recently. 

Looking at the past two years of post-earnings moves for Cronos, the stock was lower after seven of its past eight earnings reports. CRON has averaged a 3.5% swing the session after its last eight reports, regardless of direction, which is much lower than the 18.3% move the options pits are pricing in this time around. 

The equity is up 10.8% at $6.25 today -- getting a boost from the broader market -- and eyeing its highest close in over a month. Like most stocks, CRON bottomed out earlier this month, landing at a two-year low of $4 last Monday, March 16. While CRON is still trading well below its year-to-date breakeven -- off 18.5% in 2020 -- it's managed to tack on 12.2% this week. What's more, Cronos just broke north of its 30-day moving average, which has kept a lid on shares since late-January. 

CRON March 26

 

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