Pot Stock Pops on Patch Agreement

Aphria just signed an agreement to create cannabis-based transdermal patches

The shares of Aphria Inc (NYSE:APHA) are up 3.7% at $10.05 in early trading, after the marijuana concern said it signed an agreement with Manna Molecular Science to create new cannabis oil transdermal patches for medical and recreational use. As part of the agreement, Aphria has exclusive licensing rights to the product for a five-year period.

APHA stock has more than doubled since its Dec. 6 low of $3.75, bolstered by its 20-day moving average. However, the stock has struggled to surmount a speed bump in the $11 area, which is close to where APHA opened on the Big Board on Nov. 2.

Analysts are optimistic on the pot stock too, with all four giving it a "buy" or better rating. What's more, the consensus 12-month price target of $12.29 stands in territory not charted since just after the aforementioned New York Stock Exchange (NYSE) debut.

Likewise, APHA calls have been the options of choice among buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than three Aphria calls for every put in the past two weeks.

However, some of that call buying -- particularly at out-of-the-money strikes -- could be attributable to short sellers seeking an options hedge against an extended rally. The 19.74 million shares sold short represent a healthy 8.6% of the stock's available float, or nearly four days of trading, at APHA'saverage daily volume.