Smoking Marijuana

The October 17th legalization date has passed and MARIJUANA is now legal in Canada, to buy, sell and consume. Of course, users need to buy from officially licensed retailers (just like alcohol) and there does seem to be some problems in Ontario about labelling and ensuring there is enough stock to meet demand. The US and even Mexico have started to make moves in a similar direction, possibly to de-criminalize it but not make it legal to buy or sell just yet. It seems that Mexico is actually further along than the US in doing what Canada has already done.

In any event, we’ve updated our list of MARIJUANA STOCKS to watch and have recently entered into a trade for the short term. Here’s the list of stocks:

BNN Bloomberg keeps a much more updated list of these companies but these are a good start. We weren’t interested in just buying the stocks, however, because many people have been saying that they’re a short sell right now. So we got thinking that it might be a good short-term trading opportunity. As such, we wanted to know which ones had options available, and only a few do:

  • HMMJ (monthly)
  • ACB (weekly, monthly)
  • APHA (weekly, monthly)
  • CRON (monthly)
  • HEXO (monthly)
  • TRST (monthly)

So we decided to take a chance and play the weekly options game again on APHA.to (formerly APH.to, they changed their name in order to list on the NYSE as of Friday, November 2, 2018). Here’s a look at the chart:

The reason we chose this stock was because its historical volatility was north of 100%, around 138%, when we placed our trade. Our purchase price on the stock itself is around $16 and we were paid $1.45 for the Nov 23 $16.50 CALL option.

The other company we may pursue is ACB.to, which also has a historical volatility north of 100% and is cheaper than APHA.to. We may buy a couple hundred shares and sell CALLs out a few weeks.

Our goal is not to hold these companies indefinitely but to sell in-the-money so that we do have a better chance of getting exercised, thus reducing our money on margin and freeing up some capital for other trades should they materialize in November.

Though we didn’t do it this time, one thing we often do with many of our stocks with Weekly Options on them, is to buy the underlying stocks in odd lots, such as 125 shares or some similar number, that way we can sell the CALLs for a week or two out and then hold on to the other stocks and sell them if there is a big run up in the stock price itself.