Two Cannabis Stocks With Cheap Options

: CGC | Canopy Growth Corporation News, Ratings, and Charts

CGC – Two cannabis stocks, Tilray (TLRY) and Canopy Growth (CGC), are in focus in the wake of their respective quarterly reports. Both stocks have attractive call/put volume ratios.

In the past week, two cannabis names have been in focus in the wake of their respective quarterly reports. Canadian cannabis producers Tilray Inc (NASDAQ:TLRY) and Canopy Growth Corp (NYSE:CGC) had two vastly different post-earnings reactions on the charts. Below, we’ll dive into the technical setups of TLRY and CGC, as well as how options traders could be playing them.

Looking first at Tilray, the stock gapped 13% lower on Aug. 11, after the company disclosed worse-than-expected second-quarter losses and revenue, with stockpiling issues stemming from pandemic-related shutdowns. TLRY is down almost 60% in 2020, and has spent the summer months trading in a tight range between the $7 and $9 levels. For perspective, the shares were trading at $46.24 a year ago to this date.

 

In the options pits, calls are extremely popular. In the past 10 days, 87,998 calls have been exchanged at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to only 15,275 puts. The resultant call/put volume ratio of 7.84 sits in the elevated percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets of late. However, considering a healthy 18.8% of TLRY’s total available float is sold short, it’s possible some of this call buying could be shorts seeking an options hedge against any unexpected upside.

Turning to Canopy Growth, the stock gapped higher by 7.8% on Monday, after the company reported smaller-than-expected fiscal first-quarter losses. A solid restructuring plan and boosted demand during lockdown measures helped offset the coronavirus impact. Unlike its more stagnant sector peer, CGC has tacked on 24.4% in the last three months, with support emerging at its ascending 80-day moving average. Nevertheless, one year ago today, the shares were trading at $34.34.

In CGC’s options pits, it’s a similar setup as TLRY. ISE/CBOE/PHLX data shows in the past 10 days, 55,657 calls have exchanged hands on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to 7,099 puts. And while short interest has fallen off by 10% in the most recent reporting period, the 19.82 million shares sold short still accounts for almost 25% of CGC’s total available float. It appears short sellers could also be using calls here to hedge their bearish bets.

What’s another connecting thread between the two cannabis companies? They both sport attractively priced premium. TLRY and CGC’s Schaeffer’s Volatility Indexes (SVI) of 73% and 61%, respectively, both sit lower than the bottom 10th percentile of readings from the past year.

Keeping track of the week’s stock market activity is no easy feat. Our Schaeffer’s Market Mashup podcast gives you a quick 15-minute look at hot-button investing news and trends, as well as interviews with analysts and traders to help you craft a rock-solid options strategy. Tune into the latest episode of Market Mashup to up your investment game.


CGC shares were unchanged in after-hours trading Friday. Year-to-date, CGC has declined -18.49%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.


About the Author: Bernie Schaeffer


Bernie Schaeffer is the founder, chairman, and CEO of Schaeffer's Investment Research, the leading provider of research and analysis on the stock and options market. Schaeffer founded the company in 1981 with a single options newsletter and the product offerings have grown to nearly 25 different options trading real-time alert services and newsletters over the past 40 years. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CGCGet RatingGet RatingGet Rating
TLRYGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Investor Alert: Why the Bear Market Might End on 2/1?

The stock market (SPY) is at a fork in the road coming into the 2/1 Fed announcement at 2pm ET. However, in this case there are 4 different directions stocks could head from here and thus 4 trading plans you should be aware of now. 40 year investment pro Steve Reitmeister spells it all out in his timely commentary below...

:  |  News, Ratings, and Charts

3 Upgraded Stocks to Put on Your Radar This Week

With the expected continuation of monetary policy tightening, the economy is anticipated to witness a slowdown this year. Amid an uncertain economic backdrop, it could be wise to add fundamentally sound stocks HCA Healthcare (HCA), Yum! Brands (YUM) and DocuSign (DOCU) to your watchlist this week. These stocks have been recently upgraded in our proprietary rating system. Keep reading…

:  |  News, Ratings, and Charts

4 Best Software Stocks That Money Can Buy

The software industry has faced several macroeconomic headwinds since last year. However, the industry’s prospects remain strong, driven by rapid digitalization and heightened spending. Therefore, it could be wise for investors to buy fundamentally strong software stocks Salesforce (CRM), Synopsys (SNPS), Autodesk (ADSK), and Progress Software (PRGS). Read more…

:  |  News, Ratings, and Charts

2 Large-Cap Stocks to Buy Before the End of January

Growing concerns over the economy’s uncertainties and yet-to-be-tamed inflation have led to widespread worries about an economic slowdown. Therefore, fundamentally strong large-cap stocks Walmart UnitedHealth Group (UNH) and VMware (VMW) could help stabilize your portfolios amid the volatile economic backdrop. Read more…

:  |  News, Ratings, and Charts

4 Best Software Stocks That Money Can Buy

The software industry has faced several macroeconomic headwinds since last year. However, the industry’s prospects remain strong, driven by rapid digitalization and heightened spending. Therefore, it could be wise for investors to buy fundamentally strong software stocks Salesforce (CRM), Synopsys (SNPS), Autodesk (ADSK), and Progress Software (PRGS). Read more…

Read More Stories

More Canopy Growth Corporation (CGC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CGC News