Are you looking for the best penny stocks to buy? Have you ever thought about looking at options volume to gauge sentiment? In 2022, this is one of the ways active traders are looking to take advantage. While large blocks of stocks being sold or bought may suggest underlying sentiment, options trading activity has become something of a way to find “hidden” activity. I say this because stocks and options operate on different terms.
When you buy shares, you own the shares. But when you buy options contracts, you simply own the right to buy or sell the underlying stock. With this in mind, some traders are looking at unusual options volume as a sign of what we’ll call potential sentiment. Since options traders do not directly own the stock, this is seen more as a bet in favor of a given directional move. Today we take a look at a few penny stocks with unusual options activity that may be on the radar in April.
7 Best Penny Stocks to Watch
- Camber Energy Inc. (NYSE: CEI)
- MedAvail Holdings (NASDAQ:MDVL)
- 22nd Century Group (NASDAQ: XXII)
- Imperial Petroleum (NASDAQ: IMPP)
- To Fintech Holding Limited (NASDAQ: TIGR)
- DiDi Global Inc. (NYSE: DIDI)
- CTI Biopharma Corp. (NASDAQ: CTIC)
Best Penny Stocks to Buy
If you are one of those traders who are getting into options stream tracking, keep a few things in mind. First, options trading is not just about buying to open the position or selling to close the position. Like stocks, you can “sell to open” your trade, which will count towards the volume. There are also complex spreads and strategies that allow traders to achieve certain goals and profit from things like sideways trends.
Traders will also use options to hedge larger positions. For example, if profits are rising and the trader wants to hedge against bad news, he can buy put options just in case things don’t go the way the trader thinks. If you want more information on options trading, check out our article Options Trading 101: A Beginner’s Guide. For now, keep this volume insight in mind as we take a look at several penny stocks with unusual options activity this month:
1. Camber Energy Inc. (NYSE: CEI)
Energy stocks are hot right now. As we discussed at the end of last week, geopolitical catalysts are active right now. So far, they have helped send the price of oil and gas to record highs not seen in years. Traders continue to digest supply and demand news in the sector as sanctions have taken hold of global production. There has been a massive increase in interest in oil and gas penny stocks with this.
One thing companies like Camber Energy have going for them is growing support from the retail community. If you’ve followed the penny stock over the past year, you’ll remember last year’s epic rally. As was the case at the time, we saw another surge in interest in small-cap energy stocks. This also translated into the options market for Camber Energy shares.
Some of the heaviest action involves the April 22 calls of CEI stock at strike prices of $1, $1.50 and $2. Since there isn’t as much action in the later expiry dates, this may suggest that traders are looking at short-term trends at this time.
2. MedAvail Holdings (NASDAQ:MDVL)
MDVL shares have surged in recent weeks. This was due, in part, to the close of a large private offering earlier this month. MedAvail, a tech-based pharmaceutical company, has secured around $40 million which it plans to put to work. One use of revenue is to fund strategic initiatives. What does the options market for MDVL shares look like?
Like CIS stocks, MedAvail’s earliest expiration date (May 20) is seeing the most action today. In particular, the $2.50 and $5 strikes are heating up. The $5 call option has less than 2,000 open interest contracts. Meanwhile, over 5,600 traded their hands in the stock market today.
3. 22nd Century Group (NASDAQ: XXII)
The biotechnology company and maker of low-nicotine cigarettes 22nd Century Group is currently in the crosshairs of traders. While the stock has been quiet this month, on April 18, early action sent XXII stock back above $2.20. There are a few things to consider with the company right now. First, 22nd Century received notification from the Illinois Attorney General’s Office Tobacco Control that its VLN line will be listed in the Illinois Participating Manufacturers Directory. This came into effect in April. Additionally, 22nd Century is expected to release its next round of earnings in a few weeks on May 5.
Traders seem to have started hedging some bets by the looks of the options market right now. In particular, the May 20 $3 and July 15 $2 calls have seen the most action and have higher open interest levels.
4. Imperial Petroleum (NASDAQ: IMPP)
Like CIS stock, Imperial Petroleum was on our list of hot energy penny stocks last week. Momentum hasn’t cooled for IMPP stocks either, as the stock rallies back above the $1.40 mark today. The shipping company supplies petroleum products and crude oil to shipping services. Its recent run of results showed mixed results at the end of March. However, two new deals were struck last month and brought some optimism back to the title. The company also declared a dividend to its Series A holders.
What is the options market saying about IMPP shares right now? The stock is in the earliest expiration date right now, May 20. The $1.50 and $2 strike call options have the highest open interest and volume levels as of the date of this article.
5. Up to Fintech Holding Limited (NASDAQ: TIGR)
Fintech stocks remain in focus even as popular assets including Bitcoin and NFT have lost value. Needless to say, Up Fintech stocks have been in consolidation mode since mid-March. The move came shortly after the company announced its Q4 and full-year 2021 results. Up Fintech saw revenue grow 91% year-over-year, client assets on its platform growing 7% over the same period to $17.1 billion.
Wu Tianhua, CEO of UP, explained, “Although we face many respectable competitors in the local market, we believe that our comprehensive product offering sets us apart; Currently, our Australia app allows clients to trade stocks in Australia, the US and Hong Kong, and we are one of the few companies to offer US options trading.
Speaking of options trading. The TIGR stock options chain gained momentum in the stock market today. In particular, the May 20 $5 calls had just under 3,500 in open interest at the start of the April 18 session. Meanwhile, over 10,000 contracts have been traded at the time of this article.
More Penny Stocks Options Data to Digest
We’ll supplement this list of penny stocks with a few more unusual options business names:
6. DiDi Global Inc. (NYSE: DIDI)
China-based stocks, in general, have seen significant volatility due to uncertainty about their listing status in the United States. The ride-sharing company is preparing to delist from the New York Stock Exchange. However, this does not appear to have deterred traders from placing bullish bets in the options market. The list of April 22 $2.50 calls is displayed during the Monday session. Over 10,000 contracts have been traded at the time this article was published. Meanwhile, only 2,275 showed up in Open Interest
7. CTI Biopharma Corp. (NASDAQ: CTIC)
Breakout biotech penny stock CTI Biopharma remains a priority for traders this year. CTIC’s stock exploded earlier in 2022 on the news that the company’s myelofibrosis treatment Vonjo pacritinib has been approved by the FDA. According to CTI, this is the first approved therapy to address the needs of patients with cytopenic myelofibrosis. Heading into the second half of the month, stock options chain CTIC is seeing strong activity in the June 17th $5 calls today. Over 10,000 contracts have been traded at the time of this article.
Options risk and reward
The rewards are clear, but the risks can be immense. Since prices fluctuate, implied volatility changes, and time decay plays a role (all things we discuss in our Options 101 article), the value of the option can fluctuate rapidly. This is why only specific traders with extensive training in options trading choose to venture into these wild waters.
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