We believe Canopy Growth Corporation is going to become the “Microsoft of Cannabis,” and traders want to know how to get in on the action from Canopy Growth stock options.

It’s going to have its hands in everything, and when you think of cannabis like you think of technology, you’re going to think of Canopy Growth.

If you’re a “Buy and Hold” investor, you could use a dollar-cost averaging strategy each month to acquire shares of CGC stock. That means that no matter what the stock price is, you buy the same amount of shares each week, month, or quarter.

But there’s also a way to profit from the Canopy Growth, no matter if the price goes up or down.

It’s called options.

With options, you can look at short-term events and make quick profits.

For example, with Canopy Growth stock options, if you think the company is going to have a bad quarter, you can bet that the stock price will go down after the company reports earnings.

If you think Canopy is going to report great earnings, you can make a bet that the stock price is going to go up.

For example, one investor bought over $30,000 worth of Canopy Growth Corp. (NYSE: CGC) options, betting that the stock price is going to go up very quickly after the company announces earnings on November 15, 2019.

Buying what are called Calls and Puts is a fairly simple once you are approved for options trading, and one of the easiest platforms to use is Robinhood.

Today, we’re going to show you exactly how to buy Canopy Growth stock options on Robinhood.

But first, we wanted to review the risks involved with cannabis options investing before you make your first trade.

Risks with Buying Canopy Growth Stock Options

If you just buy Canopy Growth stock, unless the company goes bankrupt and becomes worthless, you’re going to be able to retain some value from your original investment.

For example, if the CGC stock price drops from $40 to $35, you still can sell it and receive some of your original investment bank.

Options work a little differently.

If it doesn’t look like your investment is going to work out or if it is working out, you have the opportunity to sell it. But there is a chance that your options expire worthless and you lose all of your original investment in a short period of time.

That’s the biggest risk with options.

You have to be comfortable that your investment could be completely wiped out.

You should never invest what you can’t afford to lose, and that’s especially true for options.

However, the profit opportunity is huge.

Canopy Growth Stock Options 101

Going back to the big bet that a trade made for Canopy Growth, we will use that example for the $25 CGC November 15 Call. You can buy options for weeks, months, or even years ahead in some cases, but we are just going to stick with this short-term play as an example.

It is by no means a recommendation. It is just an example to help you understand how options work.

On November 1, the Canopy Growth stock price traded for $19.71.

If we look at the table on OptionsProfitCalculator.com at the Call section, the “Bid” for the November 15 CGC $25 “Strike” is $0.10. The “Ask” is $0.11.

This might sound a little complicated at first, so we can break this down.

The Bid is what someone is willing to pay for the option but not the obligation to buy CGC stock for $25. The Ask is what someone is willing to sell that option for to another trader.

This trade we are looking at is a Call because we are speculating that the stock price will go up. If we believe it will go down, we would buy a Put.

So even though the Canopy Growth stock price is under $20 now, if it shoots up to $27 on November 15, your option will be more valuable because traders would be interested in buying CGC for $25 instead of paying $27.

Source: OptionsProfitCalculator.com

Let’s say that we want to go ahead and get this trade through, so we are willing to pay the $0.11 Ask price instead of waiting around to see if someone will sell it to us for $0.10.

Each option contract that we place is going to be for 100 shares.

Buying one option at $0.11 brings our total cost to $11.

You can see from the chart below that how far the stock price climbs and how quickly it can climb are important factors in making a profit from options. For example, if the CGC stock price shoots up to $23 by November 5, you will have a 427% profit.

Not bad for just clicking a few buttons!

But if you think Canopy Growth will have a blockbuster earnings report on November 15 and that the stock price could reach $27 per share, you may want to wait.

If the CGC stock price does reach $27 per share on November 15, your original investment would now be 1,736% more valuable.

Of course, that’s the trickiest part of trading options.

A trader who made 427% might kick themselves for not holding out longer and netting that 1,736% return.

However, traders often have short memories. They might forget about all the times they were up 400% on a trade but didn’t cash out because they wanted to try and squeeze an even bigger return out of their initial investment.

Then, instead of walking away with a massive triple-digit gain, they wait too long and their Call or Put starts to decline in value.

From that 400% gain, the trader may end up watching that option expire worthless and not only not make a profit, but end up losing all of their original investment.

So before buying cannabis stock options, make sure you have a plan set up of when you want to cash out!

Source: OptionsProfitCalculator.com

Of course, you also don’t have to buy $25 CGC Calls if you think the price will go up. As an example, you could buy $22 Calls if you think the price is going to go up bit want to be more conservative.

However, the Ask for those $22 Calls is $0.39. Remember that the Ask for the $25 Calls was $11 ($0.11 X100). The cost for those $22 Calls is $39 ($0.39 X 100).

You are paying for less risk.

The profit potential isn’t as large but, again, you are paying up for less risk. Climbing from $19 to $22 in a short period of time could be seen as more feasible then the stock price climbing from $19 to $25.

And the perception of where the stock is headed and what traders think is what makes people willing to buy or sell a stock for a certain price.

This isn’t by any means an ultimate guide on trading options, but hopefully it took away some of the mystery behind it and will give you a good starting point. We encourage you to continue to learn about options trading through internet resources, books, and videos.

Now, let’s take a look at setting up your first Canopy Growth stock options trade on Robinhood.

How to Trade Canopy Growth Stock Options on Robinhood

To learn more about options trading on Robinhood, the company has a helpful page for you to check out right here.

And as a reminder, Robinhood will also need to approve you for options trading.

Once you’re approved, it’s real easy to make an options trade on Canopy Growth.

You can start by typing in CGC or Canopy Growth on the search page.

Source: Robinhood
After that, you see an option that says Trade. Clicking on that will lead you to another option that says Trade Options, Sell, or Buy.

Click on Trade Options.

Source: Robinhood
For this example, we’re going to keep it consistent with November 15 Canopy Growth call options that we’ve been talking about.

So after selecting Trade Options, we looked for the November 15 options on CGC.

Source: Robinhood

When you select the $25 November 15 Call, it will then take you to this screen. This is where you will enter how many contracts you want to buy.

And as you know, each option is 100 shares, so the total cost will be $11.

Source: Robinhood

It works the same way for Puts.

If you thought the Canopy Growth stock price was going down, you would just select Put instead of Call.

Source: Robinhood

With that, you should be good to go!

With options, you just have to make sure you understand the reason why you think the stock price is going to climb or fall.

Do you think the company will have a good earnings report soon that will send the stock price up?

Do you think the company will have a bad earnings report that will send the stock price down?

Did a company have a bad earnings report that sent the stock price down but you think the response was an overreaction?

Is the company involved in a scandal – like CannTrust Holdings (NYSE: CTST) – and the stock price will keep falling?

Always make sure you know why you think a stock price is going to go up or go down before making an options trade.

We also mentioned earlier that you should have an exit strategy. Figure out when you want to cash out of a trade when it is up and also have a plan on when to sell your investment if it starts to go too far south.

That’s it!

Conclusion on Trading Canopy Growth Stock Options

Canopy Growth is so popular that it’s former CEO – Bruce Linton – is still buying shares!

Congratulations on correctly identifying that cannabis investing could lead to life-changing wealth, and we’re excited for you to start your journey.

To your investing success,

NICI Staff Reports


20 responses to “How to Buy Canopy Growth Stock Options on Robinhood”

  1. First of all, let me just say I/we appreciate the little “side workshops”. Thank you.
    Just asking for opinion here plz. I actually already have a TD Ameritrade account, which I’m already approved for options. Would my experience be similar with the different platforms. Just curious at this point …learning learning,learning. Thanx again for your time!

    • How about selling puts and calls like a spread… what’s the risk, and obligation. I have shares of Canopy so I would not be selling naked. However I don’t necessarily want my shares to be called away from me.

    • All of the trading platforms that are available are pretty similar. the big benefit to robinhood is that you don’t get charged for making trades. its free. Etrade and td ameritrade are both great platforms but they charge almost 7$ per trade. it is worth using robinhood when you can. its a good way to cut some costs.

  2. I just had bought some options with Expedia but I didn’t know how to get out when it was going down… please explain and I had some with CTSH and end losing everything ugh just trying to learn.

    • If it’s going down (or against you) and you want to get out, then you just hit the sell button, just like for a stock. However, the difference would probably be that you might have the additional step first choosing “close” before “sell” or alternatively, depending on your broker, it might be “sell to close”.

    • You already got it in the article above, but if you have tried and the trading platform won’t let you execute the trade, you may have missed the statement that you have to be approved by your broker to be able to trade options.

  3. I am very busy. I really don’t have time to learn the ins and outs of the stock market or the brains.Do have someone who is a lot more educated than I am that can pay to do the investing for me?

    • This sector and options trading may not be for you? However you cab work with a broker for additional fees and expense. The company your trading through will probably provide you with one and you can truncate your trading to buy and hold just tell the broker which stocks you want and how much you are willing to pay for the ownership of them.

  4. I am very busy. I really don’t have time to learn the ins and outs of the stock market or the brains. Do you have someone who is a lot more educated than I am that I can pay to do the investing for me?

  5. One thing I’ve learned about Robinhood that I don’t like is:
    1. They only subscribe to 2 options trading boards vs the big traders like schwab and TD that have many more so you may not be able to get the price you want for you option. It is limited and I have not been able to get the prices that some of the alerts come out at.
    2. I want to enter my exit strategy and price but it only allows for a daily, not a good til cancelled. This then requires me to reenter the trade every day if it doesn’t get filled. Part of these strategies here is to set and forget the trade as you put in your entry and exit to protect yourself without being tied to a computer screen each day, all day.

    • change the expire to never expires. The other time frame instead of daily it is the set it forget it option on Robinhood. OR close down the Robinhood account and move the funds to an account better suited to your trading style.

      Self-serve trading is more common now than in past years, and even larger trading companies have unassisted platforms with lots of options and research for your trading pleasure. Just understand your going to have to re-qualify for options trading on the level you had at Robinhood. (patience will be needed for the unfunding refunding and qualifying) Open a new brokerage account somewhere else and start trading there before you close down Robinhood.

  6. GUYS AND GALS Depending on your trading account (the company your trading through i.e. Robinhood, Etrade, Ally, etc.) You need to make sure of three things. 1] your account is funded to the levels needed to trade options (some accounts will impose margins for safety trades). 2] you have applied and been approved for option trading at the level you need to trade (option levels range from 1 – 5, depending on the firm and their rules) 3] determine a safe amount of your base amount for investing to trade on any given stock option. Depending on your balance you may want to limit your plays to 1-10%. The option contract is leveraging 100 stocks So bare in mind you might be buying the leveraged stock total at the strike price. not a single stock but 100 stocks for every 1 option contract.

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