Hey trader,
The upside gamma building on MSOS right now dwarfs the downside positioning.
Institutions have been stacking call contracts across two strikes in the span of four days…
…And the White House just scheduled a meeting on cannabis enforcement for next week.
Nearly everyone wrote this sector off months ago.
The stocks have been beaten down, short interest is extreme, and the chart looks like a graveyard.
Yet, the Block Hunter Console flagged 3,000 call contracts bought in a single print on MSOS at the $4.50 strike for April 17 expiration.
That print landed on top of 10,000 contracts already sitting at the $4 strike from last Thursday.
The Console confirmed through fill location that the majority of that $4 inventory was bought at the ask.
Positive skew is doing something unusual here. It is making the call vertical cheaper than it should be.
A $2-wide spread costs 38 cents because you are selling implied volatility at 106% while buying it at 89%.
What the Prints Tell You
The Console flagged 10,000 call contracts bought at the $4 strike on April 2nd. Fill location confirmed the bulk of that volume traded at the ask.
At first, it looks like the volume was all at the bid. However, if we dig into the volumes behind that print, we see only a small portion filled at the bid (red) with the rest coming in at the ask (green).
Four days later, a second wave arrived. Three thousand contracts hit the $4.50 strike in a single print, followed by another 1,662 contracts in the same session.
The open interest pattern confirms these are new positions. Volume exceeded open interest at both strikes on the days the prints landed.
MSOS was trading near $4 when the buying started. The $4.50 target sits roughly 12% above the current price with 11 days until April expiration.
The call-to-put ratio across both strikes is heavily skewed to the upside. Institutional capital is positioned for a move higher, and the gamma exposure at $4 and $4.50 creates mechanical buying pressure if the stock begins to rally.
Why Short Interest Compounds the Setup
Cannabis stocks carry some of the highest short interest in the market. Tilray alone sits at 13% of the float shorted with 5.93 days to cover.
That days-to-cover number is extreme. Anything north of five signals that short sellers cannot exit quickly if the stock moves against them.
MSOS holds names like Curaleaf, Trulieve, Verano, and Cresco. These smaller companies tend to carry similarly elevated short interest.
If MSOS breaks above $4, market makers who sold those 10,000 call contracts must buy shares to hedge their growing delta exposure. That mechanical buying overlaps with short covering across the underlying holdings.
The combination of dealer hedging and short covering on a $4 stock with a defined catalyst is what creates the asymmetry. The upside potential far exceeds the downside from current levels.
Why Positive Skew Gives You an Edge
Implied volatility on MSOS rises as you move further out of the money on the call side. The $4 strike carries 89% implied volatility. The $6 strike carries 106%.
That pricing dynamic is called positive skew. It is driven by short sellers buying out-of-the-money calls to hedge their positions while simultaneously selling puts near the $3 strike.
The result is that call verticals price cheaply. You are buying lower implied volatility and selling higher implied volatility. The skew discount reduces the net cost of the spread.
A $2-wide call spread that would normally cost significantly more prices at 38 cents in this environment. The skew is doing the work for you.
How to Structure the Trade
The May 15 expiration captures the full window through the White House meeting and gives the trade additional time beyond the initial catalyst.
- Buy: 1x MSOS May 15 $4 call ($0.48)
- Sell: 1x MSOS May 15 $6 call ($0.10)
- Spread width: $2
- Cost: Approximately $0.38
- Max risk: $0.38 (the debit paid at entry)
- Target: $5.00 on the stock (approximately 160% return on the spread at that level)
- Skew edge: Buying 89% IV, selling 106% IV
- Direction: Bullish
- Catalyst: White House cannabis enforcement meeting next week, 10,000+ call contracts building upside gamma, extreme short interest across the sector
MSOS does not need to reach $6 for this spread to produce a return. A move to $5 accelerates the value of the lower strike while the positive skew keeps the sold leg from expanding against you.
MSOS has made moves of this magnitude before. The stock rallied from $3.19 to $5.30 in a single week earlier this year. The gamma exposure at $4 and $4.50 provides mechanical support for a similar move if the catalyst arrives.
What the Console Is Tracking Now
The Block Hunter Console flagged the 3,000-contract print at $4.50 and confirmed through fill location that the contracts were bought. The 10,000-contract position at $4 from April 2nd was confirmed in the same manner.
Upside gamma exposure is building across two strikes with a defined catalyst one week away. Short interest across the sector adds fuel. The positive skew gives you a pricing edge that does not exist in most names right now.
The spread gives you the structure to position alongside that conviction for 38 cents of risk.
See exactly how Block Hunter catches institutional positioning before the crowd catches on.
Brandon Chapman, CMT
Creator of Ghost Prints
