Like all articles about penny stocks, it’s important to understand what you’re getting into. There are plenty of risks, but the massive rewards can far outweigh them in many cases. Few types of assets offer such immediate and immense opportunities to profit to the tune of hundreds of percentage points in a single day.
Thanks to their lower prices, the slightest move in share price can equate to significant gains. If you’re an active trader, you know this to be accurate and a daily occurrence.
But how do you find penny stocks “early” and before the crowd? Some will use data to their advantage. Insider trading trends, social media sentiment, and even options flow are just a few of the ways that “data” is compiled to formulate an investment thesis. Unbeknownst to many new traders, options aren’t solely limited to higher-priced stocks.
Many penny stocks also offer leverage through derivative assets, including options. Today we look at a handful of stocks that can be purchased below $5 and have shown some unusual activity based on current open interest and recent daily volume.
Penny Stocks To Watch Right Now
- Arbutus Biopharma Corp. (NASDAQ: ABUS)
- IronNet Inc. (NYSE: IRNT)
- CTI Biopharma Corp. (NASDAQ: CTIC)
- Tellurian Inc. (NYSE: TELL)
1. Arbutus Biopharma Corp. (NASDAQ: ABUS)
Biopharmaceutical company Arbutus is building a therapeutics pipeline for numerous viral diseases. Its list includes hepatitis B and coronavirus treatment candidates. Most recently, it placed a focus on its AB-161 platform, working toward IND-enabling studies for treating HBV and advancing a candidate in IND-enabling studies for SARS-CoV-2.
The company already has multiple clinical data readouts on other candidates, including its lead treatment, AB-729, in treating HBV. The company expects to start a triple combination Phase 2a proof-of-concept trial in the first half of the year with AB-729 combined with Vaccitech’s VTP-300 vaccine. As far as near-term events are concerned, ABUS stock could be on watch ahead of its next earnings update on March 3rd.
ABUS Stock Unusual Options Activity
Today, the April 14 Call options are on the radar with well-above-average volume in the $4 strike. More than 1,000 contracts traded compared to just one contract of open interest before today. This is much further out of the money but an interesting scenario all the same.
2. IronNet Inc. (NYSE: IRNT)
Another one of the penny stocks with unusual options activity today is IronNet. For a bit of background, the company was one of the popular meme stocks late last year. Shares surged from around $10 to highs of more than $47 following speculation sparked by tech and cybersecurity stocks. IronNet offers security solutions leveraging its Collective Defense platform. Cyber-attacks have been a topic of discussion with the rise of the Russia-Ukraine conflict, and IronNet has gained steam amid the uncertainty.
IRNT Stock Unusual Options Activity
If you’re looking for unusual activity in cybersecurity names, IRNT stock could be on that list. In a more near-term timeframe, the $4 and $4.50 call options expiring February 25th have some of the higher volumes in the chain. They’re also showing much greater levels than the current open interest. Other strikes under similar circumstances include the $5, $5.50, and $6.50.
3. CTI Biopharma Corp. (NASDAQ: CTIC)
The biotech company CTI Biopharma has gained a lot of steam to start the week. Share prices jumped more than 5% after a 3-day pullback brought it back to test its 50-day moving average on Tuesday morning. CTI is building its platform around blood-related cancer treatments.
Not much has been announced by the company this year aside from a recent inducement grant for an equity incentive plan. However, the biggest thing to be aware of right now if CTIC is on your penny stocks list is what’s planned for February 28th. Late last year, the FDA extended its review period for CTI’s pacritinib marketing application for myelofibrosis. In Q2 2021, the FDA granted priority review of the applications with a PDUFA date of November 30th. However, during labeling discussions, the FDA requested additional clinical data, which was ultimately deemed a “major amendment” to the original application. Now, the new PDUFA date is February 28th.
CTIC Stock Unusual Options Activity
This week, some larger volume can be seen for options expiring at the next nearest expiration date, March 18th. Nearly 3,000 contracts have traded at the $2 strike. There are currently 7,900 contracts of open interest and another 13,062 of open interest at the $3 strike for that expiration date.
4. Tellurian Inc. (NYSE: TELL)
There’s no secret that the energy industry has benefited from multiple tailwinds this year. The latest Russia-Ukraine conflict has sparked more interest in oil and natural gas stocks. Meanwhile, the renewable, green, and alternative energy stocks remain something to follow amid growing support from climate-friendly & ESG-focused initiatives.
Tellurian is right in the middle of both. It delivers and develops natural gas projects and trades liquified natural gas. One of the more prominent points of interest is constructing its Driftwood Liquified Natural Gas plant in Louisiana. The company expects this project to begin in April. Meanwhile, large funds, including Black Rock and State Street, have reported 5.4% and 5.93% stakes in TELL stock this month (See all TELL stock filings). In anticipation of the build and recent attention on energy stocks, TELL has managed to weather market volatility over the last few weeks. Following the January market pullback, TELL stock has bounced strongly in February.
TELL Stock Unusual Options Activity
There is quite a bit of options activity in TELL stock. Starting the week, most of the volume in the TELL options chain came into the March 18th expiration. Strike prices ranging from $3-$5.50 saw a volume of 1,000 contracts or more. In addition, the April 14th expiration Calls have amassed significant open interest, with the $6 and $4 strike prices having the highest right now.
What’s On Your Penny Stocks List In February?
Options are another way of trading sentiment-based strategies. Besides observing unusual activity, it’s also worth identifying any potential catalysts. In many cases like the ones mentioned, “unusual” or “irregular” activity can clue you in on which events traders are speculating on. In this article, we discussed several companies with unusual activity, which can be correlated with important dates some companies have already discussed. The decision now is whether or not the speculation carries weight or if this becomes a “buy the rumor, sell the news” event.