Unusual Options Activity In Tilray
Tilray, Inc. was incorporated in 2018 in Canada and researches, cultivates, processes, and distributes medical cannabis. Tilray is a global company and sells its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa.
Tilray was the first Canadian-based marijuana stock to go public on a US exchange (Nasdaq), was one of the first medical cannabis companies in Canada to be issued a cultivation license and will be one of the main recipients to benefit when Canada open its recreational-marijuana market in October. In 2018, shares of Tilray, went from $17 per share in July to just over $300 in August, an increase of more than 600%.
Fast forward a couple of years, and one of the biggest reasons for the collapse in the space was a supply shortage, as a lot of Canadian growers waited too long to expand their capacity. There was also the issue of cultivation and processing application backlogs, as well as high tax rates in the U.S. and a significant delay in the launch of the derivatives market.
And so the entire industry has a reset as price had to catch up with the fundamental. In March of this year, Tilray hit an historical low at $2.43. However, I’m confident Tilray will be one of the companies in the space that make it to the other side of the tunnel when it’s all said and done.
While large-cap recreational growers have seen their growth slow down, companies producing large quantities of medical marijuana have been doing quite well thanks to the essential nature of their business.
In Q1 2020, the company's revenue grew by 126% year over year to $52.1 million. Revenue from international medical marijuana sales was up 221%, and Canada adult-use revenue grew by 165%.
Tilray is also somewhat profitable, with a 21% gross margin. In addition, it has an ongoing partnership with Anheuser-Busch InBev to produce CBD-infused beverages.
Because Tilray is one of the fastest growing and best value cannabis stocks on the Nasdaq, today, the Smart Money bought over 10,000 call options each that expire on Friday at the strike price at $7.50 and $8.00.
The calls at the $7.50 are already in the money and the $8.00 calls are nearly in the money, but with four days to go before the options expire, there is a very high probability price will be above $8.00 before Friday. Although I don't like the price action, according to the RSI indicator, price is oversold and just broke through the down trendline...further increase the probability the Smart Money will be profitable...once again.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
