Green Plains (GPRE) a small cap with a recent unusual options trade as 3000 November $20 puts were sold to open on 3/28 and on 5/11 the January $30 calls bought 1000X to open for $565K while January $35 calls have seen 1500X bought and 1000 December $30 calls bought on 7/23. GPRE has built out a large rounded weekly base right above its VWAP from 2020 lows level and above $36 would have room back to highs above $40. GPRE is a producer of low carbon fuels and has grown to be one of the leading corn processors in the world. GPRE is transitioning from a commodity-processing business to a value-add agricultural technology company focusing on creating diverse, non-cyclical, higher margin products. GPRE is looking to further increase margin per gallon by producing additional value-added ingredients, such as Ultra-High Protein, while expanding corn oil yields.

Ethanol, also known as ethyl alcohol or grain alcohol, is a colorless liquid produced by fermenting carbohydrates found in a number of different types of grains, such as corn, wheat and sorghum, and other cellulosic matter found in plants. Most of the ethanol produced in the United States is made from corn, which can be handled efficiently and is in greater supply than other grains. Corn contains large quantities of carbohydrates that convert into glucose more easily than most other kinds of biomass. According to the USDA, on average, a 56 pound bushel of corn produces approximately 2.9 gallons of ethanol, 15 pounds of distillers grains and 0.7 pounds of corn oil. Outside of the United States, sugarcane is the primary feedstock used to produce ethanol. Ethanol is a significant component of the biofuels industry, which includes all transportation fuels derived from renewable biological materials. Biofuels are an excellent oxygenate and source of octane. When added to petroleum-based transportation fuels, oxygenates reduce vehicle emissions. Ethanol is the most economical oxygenate and source of octane available on the market and its production costs are competitive with gasoline.

GPRE has a market cap of $1.74B and is trading 14.35X Earnings and 7.2X estimated FY23 EBITDA with EBIDTA seen rising 64% in 2022 and 123% in 2023. Analysts have an average target of $48 and short interest is high at 22% of the float. BMO lowered its target to $45 staying at Outperform based on the Ultra-High Protein initiative, contribution from corn oil, internal operating improvements, and modestly improving ethanol margins. Evercore upgraded shares in January noting that GPRE is converting its 11 ethanol plants to be able to produce ultra high protein selling into end markets in global aquaculture, feed, and pet food, increasing margins ~2-2.5x in the process as the company is moving from a no margin ethanol producer to a profitable ag-tech company and is set to deliver EBITDA growth totally detached from transport fuel markets.