Thursday’s Vital Data: Tilray, Canopy Growth Corp and Amazon

Stock Market

U.S. stock futures are trading lower as traders turn their attention from politics to the Federal Reserve. Today marks the second day of the FOMC meeting and will host the announcement for their decision on whether they will hike the Fed Funds rate or keep it steady at 2% to 2.25%.

The market is currently pricing in an almost 100% chance that they hold rates steady.

Against this backdrop, futures on the Dow Jones Industrial Average are down 0.27% and S&P 500 futures are lower by 0.43%. Nasdaq-100 futures have shed 0.61%.

In the options pits, call volume spiked sharply yesterday as the Street cheered the mid-term election results. Specifically, about 23.3 million calls and 19.2 million puts changed hands on the session.

The uptick in call demand was felt over at the CBOE, where the single-session equity put/call volume ratio slid to 0.59 — a one-week low. The 10-day moving average also ticked lower to 0.66.

Options traders zeroed in on pot stocks yesterday as Attorney General Jeff Sessions, an ardent foe of cannabis, resigned. Tilray (NASDAQ:TLRY) and Canopy Growth Corp (NYSE:CGC) both finished the day sharply higher. Elsewhere, Amazon (NASDAQ:AMZN) led the charge of a robust comeback from the recently beaten tech sector.

Let’s take a closer look:

Tilray (TLRY)

Tilray was the standout winner amid a sea of green in cannabis stocks Wednesday. By day’s end, the euphoria had carried TLRY shares higher by 31%.

The catalyst for fresh strength from pot stocks was two-fold. First, Jeff Sessions, long seen as an opponent to cannabis companies, resigned as Attorney General. Second, the mid-term elections saw Michigan voting to legalize pot as well as other states like Missouri and Utah voting to legalize marijuana for medicinal use.

On the options trading front, traders came after calls all day. Activity swelled to 294% of the average daily volume, with 129,029 total contracts traded. 65% of the trading came from call options alone.

Tilray’s next quarterly report is slated for Nov. 13.

Canopy Growth Corp (CGC)

Canopy Growth Corp joined Tilray in the bullish revelry yesterday — though its gains were contained to a mere 8% pop. In addition to the bullish items mentioned previously, another factor seen as a win for pot stocks is the Democrats wresting back control of the House.

Some are speculating this could signal a new regime of support for cannabis reform.

On the options trading front, calls won the day by a hefty margin. Activity jumped to 199% of the average daily volume, with 97,546 total contracts traded. Calls accounted for 72% of the day’s take.

Volatility in CGC stock continues to be sky high. The October market crash delivered an almost 50% decline, but with this week’s comeback, the losses have now been cut in half.

Amazon (AMZN)

What’s loathed has become loved. So says the behavior of the tech sector, with Amazon being the poster child. Growth stocks were jettisoned with prejudice from portfolios during last month’s market correction. But yesterday everyone decided to jump back into the pool.

Amazon soared over $112, notching a 6.9% gain on the day. The rally took the stock back above the pivotal 200-day moving average as well as the declining trendline that has defined its descent.

On the options trading front, calls slightly outpaced puts. Activity lifted to 133% of the average daily volume, with 282,575 total contracts traded. Calls contributed 54% to the total.

Implied volatility continues to retreat in the wake of last month’s earnings release. At 34% it now sits at the 55th percentile of its one-year range. Traders are now pricing in daily moves of 2.2%

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.

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