The bill to legalize marijuana on the federal level in the U.S. was approved in a 24-10 vote by the House Judiciary Committee
While the Dow is sinking midday amid a weakening retail sector, news that the U.S. House Judiciary Committee has approved a bill to legalize marijuana on the federal level has the pot sector flying high. The bill, called the Marijuana Opportunity Reinvestment and Expungement Act of 2019, was approved in a 24-10 vote and brings the legalization of cannabis closer to potentially being passed by the Democratic-controlled House of Representatives. Three stocks in particular surging on the news are Canopy Growth Corp (NYSE:CGC), Aurora Cannabis Inc (NYSE:ACB), and Cronos Group Inc (NASDAQ:CRON). Below, we'll look at how CGC, ACB, and CRON are faring today.
Bulls Pile on as CGC Stock Continues Rally
Canopy Growth is continuing its rally off Tuesday's two-year bottom of $13.81, on pace to notch its third consecutive win, and close north of familiar pressure at its 40-day moving average for the first time since late May. The stock has also successfully closed its post-earnings bear gap, suffered last week after posting a third-quarter loss. The stock is up 17.7% to trade at $20.96 at last check.
Options players have been piling on in response. So far, 171,000 calls and 85,000 puts have crossed the tape -- five times the intraday average. A massive amount of this activity is taking place at the 11/22 20.50-strike call, while the June 25 and 11/22 strike call are seeing a lot of action as well, with contracts being opened at both.
ACB Eyes Biggest Jump in Nearly a Year
Aurora Cannabis is the best performer of the three stocks covered so far today, up 18.6% to trade at $3.13 at last check. Like Cronos, ACB is also enjoying day three of its rally off two-year lows near the $2 region, following a disappointing earnings report. Now, ACB is squaring back up with its descending 20-day moving average -- a trendline the pot stock briefly conquered earlier this month.
Calls are flying off the shelves for Aurora, too, with 118,000 exchanged so far -- four times whats typically seen at this point. Quite a bit of buying action seems to be happening at the weekly 11/22 3-strike call and the 11/29 3.50-strike call, with contracts being opened at the former.
Options Bulls Bet on More Upside for CRON Stock
Cronos is also joining the sector rebound, up 11.5% to trade at $7.66 -- testing its footing back at the 20-day moving average, and eyeing its highest close in two weeks. As to be expected, options are popping for CRON stock too, with 83,000 calls and 20,000 puts on tap so far -- double the intraday average. The weekly 11/22 8-strike call is the post popular, with positions opening here for a volume-weighted average price (VWAP) of $0.15. This means these traders are likely expecting CRON to pop north of $8.15 (strike + VWAP) by the time these contracts expire tomorrow.