Options Bulls Eye Cronos' Upcoming Earnings

Calls are running at three times the average today

Digital Content Manager

Apr 27, 2020 at 1:23 PM

The shares of Cronos Group Inc (NASDAQ:CRON) are climbing higher today, up 6.4% at $6.60 at last check, set for their first close north of the 80-day moving average since mid-February. The marijuana producer just announced plans to release its first-quarter earnings report next Friday, May 8, and options players are placing bets on CRON ahead of the event.

So far, 17,000 calls have crossed the tape -- three times the intraday average -- compared to 3,188 puts, which are also running at a slightly quicker clip than usual. The two most popular contracts are the weekly 5/1 7- and 6.50-strike calls, with positions being opened at both. However, the monthly May 7 call, which expires on May 15, after CRON's May 8 earnings report, is also seeing plenty of action today.

This suggests that these traders are expecting CRON to overtake the $7 level, which hasn't been breached since the shares' Feb. 24 bear gap. Since then, the stock has been trading sideways, though support at the 20-day moving average has helped guide Cronos stock to a 16.3% gain for the month.

CRON Chart Apr 27

Cronos' earnings history, meanwhile, is pretty dismal. Looking back, CRON has closed lower the day after the company reports during the last eight quarters, including a 10.6% plummet in March. During the past two years, the stock has averaged a post-earnings swing of 4.6%, regardless of direction. This time around, the options market is pricing in a much bigger 19.4% move for Tuesday's trading.

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