SNDL - A Pretty Interesting Bet

Photo by Gilly / Unsplash

Sundial Growers Inc. (Ticker: SNDL)

One of r/wallstreetbets many favorites.

A stock I have been actively watching for a while.

The Previous Close price at the time of writing this was: $0.5977.

One thing I have noticed is that this stock has almost always been on the move.

IT IS ALWAYS ON THE MOVE.

This is important.

So then I found two interesting bets in the option chain for SNDL

15th July 2022 $0.50 CALL
15th July 2022 $0.50 PUT

So the bet here is that the stock will swing heavily in either direction, and we need to identify bets with at least 100% returns in order for this bet to generate money.

The risk profile for the calls looks like this.

For the calls to make the entire bet profit, we need the stock price to be at least $1.00 by July 2022. The only upper limit on this bet is the moon. The downside is that you loose all the money from this CALL option.

That's why we take a look at the PUT option risk profile.

For this one to profit the entire bet, we need the stock to reach $0.20 by the end of July 2022. If the stock goes to $0.55 or higher, the money spent on this PUT is lost.

Good thing we hedged the bet.

The only way this bet is lost is that the stock price is somewhere over $0.20 and below $1.00 at the end of July.

To put the trade in very simple words; This is a bet that Sundial Growers will not trade sideways the next half year. It is also entirely possible to exercise or sell the option(s) any time from now and until July 2022 to take all profits or secure the initial investment.

Look at the following to stock price movements.

Here is the Year To Date visuals.

And here is all price data from IPO visualized.

This stock has always been moving in drastic speeds in either direction.

This is simply a bet directly based on the movement on the stock price.

It is a bet that the stock will continue to be on the move.

One don't even need to care about what the company does by taking this bet. The more extreme in either the higher end or lower end this stock goes, the higher the profits.

This is not financial advice. I'm just sharing my interesting observations.

And remember what I wrote earlier;

The only way this bet is lost is that the stock price is somewhere over $0.20 and below $1.00 at the end of July 2022.
Pål-Kristian Hamre

Pål-Kristian Hamre