In this article, we focus almost 100% on data for some penny stocks. We look at the options market to get a sense of potential pent-up sentiment. While high call volume or high sell volume does not necessarily indicate a bullish or bearish outlook, traders will use this data as part of their overall due diligence process. Identifying possible “big money” bets or large hedges can help add a layer of insight to any trading strategy.
Top Penny Stocks to Watch
Generally speaking, higher call volume may indicate more bullish sentiment, and higher sell volume may suggest bearish sentiment. But as anyone with a little knowledge of options knows, you can trade them like stocks and therefore “sell to open” a position is a choice when trading options. This will also contribute to the volume figure. Remember when looking for penny stocks to buy based on unusual options activity.
Now, let’s get into the details and discuss some of the best penny stocks to watch with unusual options activity in the stock market today.
- FuboTV Inc. (NYSE: FUBO)
- Imara Inc. (NASDAQ: IMRA)
- Bird Global Inc. (NYSE: BRDS)
- Party City Holdco (NYSE:PRTY)
- PLBY Group Inc. (NASDAQ: PLBY)
1. FuboTV Inc. (FUBO)
FuboTV is a leading sports entertainment streaming company. It is also growing in games and this week announced the launch of its bookmaker in New Jersey. This news appears to have triggered action in the options market. In particular, the volume of the September 9 $3.50 and $4 calls is significant.
2. Imara Inc. (IMRA)
Today, biotech company Imara grabbed some attention in the stock market thanks to the news. The company has entered into an asset purchase agreement with another pharmaceutical company, Cardurion Pharmaceuticals. The agreement involves the sale of tovinontrine and other assets of its PDE9 program for $34.75 million. While there was already a significant gap, the options market appears to continue to rise with unusual options activity. In particular, the September 16 calls to $2.50 saw more than 20 times the volume compared to open interest. The October 21 $2.50 calls also showed significantly higher daily volume compared to the O/Is.
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3. Bird Global Inc. (BRDS)
Electric mobility company Bird Global has expanded its access to new cities in the United States. Bird focuses specifically on scooters and e-bikes and recently obtained permits to expand its programs in San Diego, Memphis and Newark. It will also enter Louisville, Minneapolis, Knoxville and Bradenton. The stock options chain BRDS is not the most active among the names on this list of penny stocks. However, when it comes to unusual options stocks, April 21, 2023 calls of $2.50 saw an imbalance between today’s volume and current open interest. More than 1,100 contracts were traded for less than 500 open interests. With such a distant expiration, it will be interesting to see if this last bet is, in fact, bullish.
4. Party City Holdco (PRTY)
Party supplies company Party City recently soared on the stock exchange, and options traders may also have started placing bets. With the Halloween season fast approaching, PRTY stocks tend to be the ones retail traders focus on. Stocks have risen significantly over the past month on the back of strong second quarter results. Heading into the rest of the month, it looks like most of the action is taking place in the September 16 $2 calls. Over 1,000 contracts have been traded as of the date of this article, and there is also significant open interest with over 13,000 contracts.
5. PLBY Group Inc. (PLBY)
The troubling trend for PLBY shares continued in the stock market today. But some traders seem to have turned to the options market for consolation, hoping for a bullish outlook. The media company, well known for its mansion parties, magazines and digital entertainment, hasn’t been so bright in the market. Will this change?
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As for the options market, some bets are placed on PLBY calls expiring in October. At the time of this article, over 2,300 contracts have been traded for less than 1,500 open interest. This imbalance in the $7.50 strike seems to have brought some optimism to some in the Fintwit community. Now the market is waiting to know if this sentiment turns out to be true.
Penny Stocks & Options Activity
Penny stocks are already speculative. But when you initiate activity in the options market, this speculation can become even more magnified. It is important to remember what was discussed above: Not all volume is buy volume, and options can be “shorted” by selling to open a position. This process also comes with certain rewards for traders performing this type of trade. If you’re new to options trading, here’s some insight from our article: Options Trading 101: A Beginner’s Guide.
“An options contract gives the buyer the option to buy or sell the underlying asset depending on the type of contract he holds. Unlike futures contracts, the holder is not obligated to buy or sell the asset if he decides not to. Each contract will have a specific expiration date on which the holder must exercise his option.
The options contract gives buyers two types of options regarding the rights that can be acquired with different options contracts: Call options give buyers options regarding the purchase of shares at a time stipulated in the future. In contrast, puts give them options to sell a certain number of shares they hold at some point in the future.
… You can’t forget the risks. Keep reading Options Trading 101: A Beginner’s Guide, for a comprehensive overview of the basics of options trading.
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