Hottest Stock on the Block? Pot.

2018-10-01 | Alexis Brown

Regardless of what the moral compass of the company associated with the stock is, when a stock jumps double digits in less than several days it gets attention.

Now to multiple people’s shock, the double digit jumping stocks happen to be stocks for marijuana.

Yes, you read that correctly – cannabis.

Weed Stocks to Watch

It’s finally gained some traction aside from the normal ‘pot smokers’ and medical users that are generally the people drawing attention to the drug. With the U.S. now allowing Canadian-based marijuana stocks to trade on both the NASDAQ and the New York Stock Exchange (NYSE), it’s important for investors and traders alike to be aware the rising market. There are a few prominent players in the cannabis stock game – Tilray (TLRY), Aurora Cannabis (ACBFF), Canopy Growth (CGC), Cronos Group (CRON), and Hydropothecary Corporation (HYYDF).

Another potentially big player jumped on the scene earlier this week. India Globalization Capital (IGC) was up over 20% midweek. The spike came after the company announced that it had solidified a partnership to manufacture energy drinks infused with cannabidiol (CBD oil). Whether or not they continue forward with this upward trend is to be determined.

But these weed stocks have definitely created a ripple in the investor ocean. As Canada has now legalized marijuana throughout the entire nation, the U.S. is slowly creeping in that direction. Currently 31 states and the District of Columbia have legalized marijuana for medicinal purposes, and 9 states, plus D.C., have legalized it for recreational purposes.

The Next Big Move for Stocks in Marijuana

So investors who are “bullish” pot, hope other nations will start to follow suit. As more cannabis companies are allowed to sell stock in the U.S., like Tilray, things could begin to shift in favor of those for marijuana versus those against. Especially if the word on the street that beverage companies are looking to form partnerships with cannabis companies turns out to be true – and it seems to be.

Just like India Globalization Capital’s partnership to begin making cannabis infused energy drinks, companies like Coca Cola have stated they’re looking to jump in the business. After all, Constellation Brands, the company behind Corona, has already invested several billion dollars into Canopy Growth.

What does this mean for trading though?

Trading Weed Stocks

After all, we are an educational trading company. We have our theories.

For starters, you don’t have to only trade marijuana stocks – there are other stocks that are related in more than one way to the cannabis industry. For instance, hemp. While it’s different from stocks in marijuana, hemp stocks are an alternative if you’re wary of the controversy around marijuana.

The biggest player in the hemp game is Hemp Inc., which has been around since 2008 and is essentially a ‘one-stop shop’ for all things hemp. As it’s been around for over a decade now, Hemp Inc. financials have a solid grounding within the market, so it isn’t as heavily affected by volatility

Remember too, the short answer is that hemp and marijuana aren’t the same thing. They’re merely both part of the cannabis family. But back to trading marijuana.

Currently both John Carter and Henry Gambell have been actively trading Canopy Growth (CGC) options, and have their eyes on others. It appears too that weed stocks are incredibly volatile right now, as investors are driven heavily by headlines, especially when it comes to marijuana. It’s a topic that you generally fall on either pro or against.

Yes of course, there are people that are rather impartial to the idea altogether, but they aren’t the majority. This works in the favor of traders, like us, as volatility can be used as an advantage.

If you want to see how to use volatility to your advantage, whether it be weed stocks or something less controversial, check out our class called The Options Foundation Course. It’s a fantastic course for people wanting to dive more into options trading in general too.