Call Trading Turns Red-Hot for Middling Pot Stock

The shares of Canadian cannabis company Sundial Growers Inc. (NASDAQ:SNDL) were last seen up 2.9% to trade at 86 cents. After an extended drought on the charts, Sundial stock rocketed to $3.96 on Feb. 11. This  rally quickly lost steam, succumbing to  pressure from the 10-day moving average, which pushed the security below the $1 level, though it still has long-term support from the 200-day trendline. Despite the struggle SNDL has faced, the equity remains up 81.6% in 2021, and options traders are keeping the stock on their radars.

Despite the equity's recent downward trend, call traders have been undeterred, speculating on plenty of upside for the cannabis stock. In fact, SNDL just landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the past two weeks, where new names are highlighted in yellow. According to this data, 533,877 calls and 59,964 puts were exchanged over this two-week period, with the most popular contract in this timeframe being the weekly 4/23 1-strike call, followed by the weekly 4/30 1-strike call.

Today, Sundial stock is seeing right around the average intraday call volume, with 72,000 crossing the tape versus just 3,643 puts. The weekly 4/30 1-strike call is the most popular, distantly followed by the weekly 5/7 1-strike call. This shows options traders are continuing to speculate on the security's ability to begin moving out of penny stock territory in the near future.

Analysts, meanwhile, aren't as sold on SNDL. In fact, all five brokerage covering the equity rate it a tepid "hold" or worse. Additionally, the stock's 12-month consensus target price of 78 cents is a 13.2% discount to current levels.