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Buy MSOS; Sell to Open MSOS February 19 $55 Calls

Earlier this morning in this week’s issue, I mentioned how U.S.-based cannabis stocks remain the most attractive in both the short and long term, and that they have been less volatile than their Canadian counterparts.

I also mentioned that the AdvisorShares Pure US Cannabis ETF (MSOS) is close to new all-time highs, looking ready to break out, and our best way to play the U.S. cannabis stocks.

The ETF is up today, and we got a good setup to open a new trade. Here are the details:

Buy MSOS and sell to open the MSOS February 19 $55 calls with a net debit of $52.15 or below.

For example, I’m looking right now at buying MSOS shares at $53.15 and selling the calls at $1.00 for the $52.15 net debit. Any combination that gets you $52.15 or under is good.

The calls expire Friday, so if MSOS closes above $55, our shares will be called away for a quick 5.5% gain in less than four days (which is 669% annualized). If it’s below $55, we’ll hold the shares and look to sell additional calls and collect our next payout.