Are Options Traders Betting on a Big Move in Tilray (TLRY) Stock?
Investors in Tilray, Inc. TLRY
need to pay close attention to the stock based on moves in the
options market lately. That is because the May 17, 2019 $47.00 Put
had some of the highest implied volatility of all equity options
today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting
in the future. Options with high levels of implied volatility
suggest that investors in the underlying stocks are expecting a big
move in one direction or the other. It could also mean there is an
event coming up soon that may cause a big rally or a huge sell off.
However, implied volatility is only one piece of the puzzle when
putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Tilray
shares, but what is the fundamental picture for the company?
Currently, Tilray is a Zacks Rank #4 (Sell) in the Medical - Drugs
industry that ranks in the Top 32% of our Zacks Industry Rank. Over
the last 60 days, one analyst has increased the earnings estimate
for the current quarter, while two have revised their estimates
downward. The net effect has taken our Zacks Consensus Estimate for
the current quarter from a loss of 19 cents per share to a loss of
23 cents in that period.
Given the way analysts feel about Tilray right now, this huge
implied volatility could mean there’s a trade developing. Often
times, options traders look for options with high levels of implied
volatility to sell premium. This is a strategy many seasoned
traders use because it captures decay. At expiration, the hope for
these traders is that the underlying stock does not move as much as
originally expected.
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