Pot Stock Plummets on Dismal Quarterly Report

Aphria's earnings report is weighing on the sector

Assistant Editor
Apr 12, 2021 at 1:37 PM
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The Canadian pot sector is seeing some negative price action today, after a fiscal third-quarter earnings report from Aphria Inc (NASDAQ:APHA). According to an analyst from Stifel, the company's earnings are "setting the tone for what is going to be a difficult earnings season for the Canadian producers." More specifically, Aphria announced losses of 91 cents per share, much wider than the three cents anticipated by analysts, on lower-than-expected revenue. At last check, APHA was down 13.6% to trade at $14.07, on track for its worst single-session loss since Feb. 11.

Today's plummet has Aphria stock looking to close below the 80-day moving average for the first time since late November. However, the $14 level has served to catch multiple pullbacks since February, and appears to be catching today's gap lower. Year-to-date, the equity is still up around 104%. 

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Meanwhile, options traders are chiming in at a rate that's double what's typically seen at this point. So far today, 46,000 calls and 18,000 puts have crossed the tape, volume that's pacing for the 97th percentile of its annual range. Most popular by far is the April 15 call, where new positions are being opened. 

Looking at the options pits within the last two weeks, APHA's 10-day put/call volume ratio of 0.59 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) stands higher than all other annual readings. This means that while calls have outnumbered puts on an absolutely basis, puts have been picked up at their fastest rate all year. 

Now could be a decent time to weigh in on these options, too. The stock is seeing reasonably priced premiums at the moment, per APHA's Schaeffer's Volatility Index (SVI) of 104%, which sits in the 20th percentile of its annual range. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at a 91 out of 100, meaning Aphria stock has exceeded option traders' volatility expectations during the past year.

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