$MSOS Sold Its Top Holdings Right Before the Breakout

The ETF Sold the Tickets Before the Show

You can't make this up. The AdvisorShares Pure US Cannabis ETF $MSOS spent three sessions selling down its two biggest winners. Then on Wednesday it sat pinned at $5.10 with the most bullish options board we've seen on it in months. The fund sold the rally it was about to get.

The Option Chain

Start with the board, because that's the story. We mapped the September 18 chain Wednesday afternoon with $MSOS at $5.00 even and the bid stacked 20,000 deep. The $5 calls carry 34,297 contracts of open interest, the strike that's pinning price right now. The $6 calls carry 43,922, the biggest block anywhere on the chain. Wednesday's flow leaned the same way: 550 of those $5 calls traded against just 71 puts. Almost every contract that matters sits above spot. Here's why that's fuel. Dealers who sold those calls are short them, and they hedge. On a clean break above $5.10, they have to buy stock to stay flat. The higher it goes, the more they buy. That's a mechanical squeeze path toward $6.00 into September opex, with $5.50 as a speed bump on the way. Downside is cushioned too, with put walls at $4.50 and $4.00 underneath. Boards like this don't come around often in this name. All the fund had to do was not get in the way.

The reasons are numerous why MSOS is an albatross

It got in the way. The daily holdings files tell it plain. August 28: 500,000 shares of $GTBIF sold, plus 71,750 of $CRLBF. September 1: 10,300 more $GTBIF and 135,293 of $TRLV out. September 2: another 301,432 of $GTBIF, 300,000 of $TRLV, and 100,000 of $CURLF. Three sessions, 811,732 shares of $GTBIF gone, call it $6 million, plus roughly $5 million of $TRLV. All of it dropped right at the breakout line, right into the gamma window. Supply is supply, and every share sold near these levels is a share the breakout has to eat. If the $5 break stalls this week, we know where some of the overhead came from.

And what did the fund buy while selling its winners? Vireo. The $VREOF swap line grew from 744,498 shares to 946,512 across those same sessions. We won't drown you in the weeds, but the contrast fits in one paragraph. Green Thumb just posted $306.7 million in quarterly revenue with real GAAP profit, a 27.5% normalized EBITDA margin, $283.6 million in cash, and it bought back 7.9 million of its own shares last quarter above $6. Vireo grew revenue 335% to $209.3 million, but nearly all of it was purchased through a string of acquisitions paid in paper, at a 19.8% margin and with a $68.1 million loss on the books for fiscal 2025. One company generates cash and retires its share count. The other prints shares to buy revenue. And the kicker: Vireo's CEO has a comp package that grants 10 million fully vested shares a year, gated on a 900,000 share-per-day trading-volume test. The ETF's own daily buying feeds the very volume that unlocks those grants. Selling the buyback machine to fund that is a choice.

It’s time to unload the garbage

Here's the thing. If $MSOS needs to raise cash, the bottom of its own book is begging for it. The fund still carries HempFusion and the Cannabist swap marked at exactly zero. Dead weight, still on the books. Below that sits a tail of sub-dollar positions: Fluent at two cents, MariMed at eight, Planet 13 at thirteen, Vapen at twenty. The whole tail is a rounding error against a near-billion-dollar book, but it still eats swap lines, collateral, and attention. Sell the junk. Let the zeros go. Concentrate in the operators that actually earn money, and stop shaving the winners every time the plumbing needs cash.

To be fair

Some fairness before we go. $MSOS doesn't trade by choice the way we do. Creations and redemptions force its hand, and with roughly $548 million pledged as swap collateral against a negative cash line, a manager meeting outflows sells what's liquid. What's liquid is what's biggest. We get it. But intent doesn't matter to the tape, and the tape got fed three days of supply at the worst possible spot. The trade has been sell $5.05 if the move happens on Wednesday or Thursday. Thats gospel until it isn’t.

Our read stays the same as Wednesday's desk note. The line is $5.10 with volume. Above it, dealer hedging turns into buy flow and $6.00 is the target and the wall into opex on the 18th. The gamma didn't change this week. The fund's timing is another matter. In this market, timing is the whole trade.