Key insights
- The author is positioning for a significant gain in the MSOS ETF, which tracks cannabis companies, by buying call options ahead of the US midterm elections. Historically, cannabis stocks have seen substantial moves following elections, particularly when Democrats are favored to win, due to potential legislative changes like marijuana legalization. The author believes MSOS will be a focus for election hedging and expects a run-up in the stock.
You know me from my previous SpaceX 400 bagger DD. Important note - this is NOT a post to talk about politics, nobody cares who you’re voting for. This is just how to make money positioning yourself with stocks/options before and after the midterms. Right now, Republicans control both chambers of Congress. The prediction markets show Democrats are heavily favored to win. As we’ve seen during EVERY election, there are certain stocks that always run up big and move crazy after elections.
$MSOS - MSOS is an ETF that holds the top cannabis/weed companies. In the past, weed stocks have had absolutely crazy moves after elections. After the 2020 election, certain weed stocks jumped over 2,000%. In contrast, when Trump and the Republicans won in 2024, $MSOS and other weed stocks fell over 80% in the coming months.
There’s a reason for the big moves. The Democrats want to pass several bills that would be positive for the weed sector. In fact, just yesterday, Congressman Steve Cohen introduced a bill that would fully legalize marijuana.
The last big event happening this year is the Midterms. I believe traders and hedge funds will start positioning themselves for the election on Monday, and the run-up will start. Since AI and Crypto would be under pressure if the Republicans lose (regulation, anti-data centers, anti-CLARITY Act), I believe a lot of the hedging will be with weed stocks. We already saw what happened to tech and crypto yesterday. Since $MSOS is an ETF that holds the top weed companies, I suspect this will be the main focus for the election hedge Monday/Tuesday.
Positions - Lots of shares, Nov 6th $4 Calls and Nov 6th $4.50 Calls
We’ve seen this stock move crazy before. On December 12th, $MSOS went up 55% in a single day just because Trump was preparing to reclassify marijuana from Schedule I to Schedule III. That news event wasn’t even that big of a deal, but it went up over 50% anyway.