Pot Stock Watch

Hey Trader,

Last week was a big one in the cannabis space …

A huge slew of earnings saw some stocks pop …

While others dropped.

Now, earnings weren’t the only thing moving the cannabis sector last week. Newly drafted legislation out of the GOP has been drafted, and could be presented in its final form as early as late this month.

Our Head Income Trader Bill Griffo took a closer look at what this legislation could mean for the U.S. cannabis market in his free Power Income newsletter …

And pointed out that U.S. fundamentals are currently at only one-tenth of their fair value.

Suffice it to say … there’s a lot of potential upside in this market, especially if the new legislation gains traction.

GrowGeneration Corp. (Ticker: GRWG)

Griff pointed out GrowGeneration Corp. (Ticker: GRWG), the largest hydroponics supplier in the U.S. 

GRWG was among the many pot stocks to report earnings last week, including record-high revenues of +111% year-over-year. Guidance lagged, so the shares didn’t see too much of a post-earnings launch, but their fundamentals are solid.

Chart courtesy StockCharts

In the pits, the January 2022 40-strike call is the top open interest position by a longshot, with 10,617 contracts. The second highest open interest contract is the January 2022 30-strike call, with only 4,205 contracts open.

According to Griff, now might not be a bad time to buy the dip, and he pointed out a specific call spread with a pretty hefty 375% max return.

Read more about it here.

And if you like Griff’s style of trading, his Power Income Trader program has been absolutely crushing it. Find out more right here.

Sundial Growers (Ticker: SNDL)

A personal favorite of mine is SNDL, which has also received a fair bit of meme stock attention over the last year as well.

Chart courtesy StockCharts

Post-earnings, SNDL soared more than 27% during Friday’s trading session, closing at 92%.

And while the company did report a significant improvement of year-over-year revenues, the true catalyst behind SNDL’s monumental move is the announcement of a $100 million CAD share buyback program. This would represent about 5% of the company’s current outstanding shares, and the goal is likely to push the share price back above the $1 mark, so that the company can continue being listed on the Nasdaq.

In the pits, options traders were quick to hop on the news.

SNDL’s top two open interest contracts are the January 2022 1-strike call, and the November 1-strike call, which saw an additional 72,139 of open interest added during Friday’s trading session.

Akerna (Ticker: KERN)

Speaking of meme squeezes …

Cannabis software stock KERN is looking hot on Monday, trading unusually heavy volume without a clear catalyst in sight.

The shares did deliver a promising earnings report last week, with a 37% increase in year-over-year revenue, but it is more likely this is an attempted short squeeze rather than a delayed earnings reaction.

The KERN pits are popping, with 33.6 times their typical volume, though the largest block of contracts to cross the tape so far is just 419 January 2022 5-strike calls.

Your Only Option,

Mark Sebastian


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