Cannabis Stock Squeeze: Option Traders Eyeing New Highs For Tilray

With stocks in the news this week, we’ll reveal what the options market is expecting in terms of upcoming stock moves and look at how options can play a role in potential short-squeeze situations.

Using Tilray, Inc. (NASDAQ: TLRY) as an example, we’ll also look at how spreads might be used in a high-premium environment to reduce capital outlay – whatever your trading view.


Overview and Expected Moves

First, a comparison of some of the expected moves over the next month for Tilray, Canopy Growth Corporation (NASDAQ: CGC), Aurora Cannabis Inc. (NYSE: ACB), Aphria Inc. (NASDAQ: APHA) and Cronos Group Inc. (NASDAQ: CRON) via the Options AI Calculator

 

With Tilray (TLRY) trading about $55, the options market is pricing an expected move for the month of over 60% in either direction. (note – the company is set to report earnings the first week of March). The move being priced in options corresponds to about $90 for a bullish consensus and $20 bearish:

Short Squeezes and Option Strikes

At the time of writing, the highest near-dated option strike is 65. As the stock moves higher, higher strikes will likely be added (in fact, strikes are being added today up to 100), but there is often a lag for short gamma to be re-established. The term “gamma squeeze” has been used frequently in the last …

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