Tilray, Canopy Growth Options Traders Place Their Bets

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Cannabis stocks tend to hibernate during the summer and giants Canopy Growth Corporation (NASDAQ:CGC) and Tilray, Inc. (NASDAQ:TLRY) have lulled into a sleepy sideways action.

The sideways action came after a months-long downtrend after Canopy Growth and Tilray climbed in unison and reached highs of $56.50 and $67, respectively, on Feb. 10. Both stocks then found their bottom on May 13 and have since traded in tight ranges on low volume.

On Wednesday both stocks dropped again, trading down around 4% intraday. Canopy Growth and Tilray may be about to reverse the trend, however, as both fell into support:

Policy Changes: On Wednesday, the FBI updated its policy for new employees. The government agency will now consider candidates who have not used cannabis within the year before their application. Previously the FBI required candidates to have not used cannabis within the three years prior to their applying or employment.

Despite news of the FBI’s policy change, Canopy Growth and Tilray’s stock remained handcuffed. Options traders see the news as a move forward toward federal legalization and bought the dip. The traders purchased $158,256 worth of bullish Canopy Growth call contracts and $201,901 worth of Tilray calls.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Canopy Growth Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

  • At 11:20 a.m., a trader executed a call sweep near the ask of 396 Canopy Growth options with a strike price of $23.50 expiring on July 23. The trade represented a $61,776 bullish bet for which the trader paid $1.56 per option contract.
  • At 11:27 a.m., a trader executed a call sweep near the ask of 600 Canopy Growth options with a strike price of $27 expiring on July 16. The trade represented a $25,200 bullish bet for which the trader paid 42 cents per option contract.
  • At 11:31 a.m., a trader executed a call sweep near the ask of 891 Canopy Growth options with a strike price of $30 expiring on Aug. 20. The trade represented a $71,280 bullish bet for which the trader paid 80 cents per option contract.

The Tilray Option Trades: Below is a look at the notable options alerts.

  • At 9:55 a.m., a trader executed a call sweep near the ask of 200 Tilray options with a strike price of $17 expiring on Aug. 20. The trade represented a $37,000 bullish bet for which the trader paid $1.85 per option contract.
  • At 10:12 a.m., a trader executed a call sweep near the ask of 271 Tilray options with a strike price of $20 expiring on Aug. 20. The trade represented a $28,997 bullish bet for which the trader paid $1.07 per option contract.
  • At 10:39 a.m., a trader executed a call sweep near the ask of 1000 Tilray options with a strike price of $17.50 expiring on July 30. The trade represented a $87,000 bullish bet for which the trader paid 87 cents per option contract.
  • At 11:05 a.m., a trader executed a call sweep near the ask of 268 Tilray options with a strike price of $30 expiring on Jan. 21, 2022. The trade represented a $48,776 bullish bet for which the trader paid $1.82 per option contract.
  • At 11:05 a.m., a trader executed a call sweep near the ask of 204 Tilray options with a strike price of $30 expiring on Jan. 21, 2022. The trade represented a $37,128 bullish bet for which the trader paid $1.82 per option contract.

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