Are you looking for the top penny stocks to buy? Have you ever thought about looking at options volume for gauging sentiment? In 2022, this is one of the ways that active traders are looking to gain the edge. While big blocks of stock sold or bought can suggest underly sentiment, options trading activity has become somewhat of a means to find “hidden” activity. I say this because stocks and options operate on different terms.
When you buy shares of stock, you own the stock. But when you purchase options contracts, you simply hold the right to buy or sell the underlying stock. In this light, some traders are taking unusual options volume into account as a sign of what we’ll call potential sentiment. Since the ones doing the options trading aren’t taking direct ownership of the shares, it’s seen as more of a bet in favor of a given directional move. Today we look at a few penny stocks with unusual options activity that could be on the radar in April.
7 Top Penny Stocks To Watch
- Camber Energy Inc. (NYSE: CEI)
- MedAvail Holdings (NASDAQ: MDVL)
- 22nd Century Group (NASDAQ: XXII)
- Imperial Petroleum (NASDAQ: IMPP)
- Up 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 these traders getting yourself into tracking options flow keep a few things in mind. First, options trading isn’t just buying to open the position or selling to close the position. Like stocks, you can “sell to open” your trade, which will factor into volume. There are also spreads and complex strategies that allow traders to achieve certain goals and take advantage of things like sideways trends.
Traders will also use options to hedge larger positions. For example, if earnings are coming up and the trader wants to hedge against bad news, they might purchase puts just in case things don’t go how the trader thinks they will. If you want more info on trading options, check out our article Trading Options 101: A Beginner’s Guide. For now, keep this info on volume in mind as we look at several penny stocks with unusual options activity this month:
1. Camber Energy Inc. (NYSE: CEI)
Energy stocks are red hot right now. As we discussed late last week, geopolitical catalysts are active right now. Thus far, they’ve helped send the price of oil and gas to record levels not seen in years. Traders continue digesting supply and demand news within the sector as sanctions have put a stranglehold on global output. There’s been a massive uptick in interest for oil and gas penny stocks with this.
One thing that companies like Camber Energy have going for them is rising support from the retail trading community. If you’ve followed the penny stock for the past year or so, you’ll remember the epic rally last year. As was the case then, we’ve seen another uptick of interest in small-cap energy stocks. That has also translated into the options market for Camber Energy stock.
Some of the heaviest action is in CEI stock’s April 22nd Calls at the $1, $1.50, and $2 strike prices. Since there isn’t as much action in further out expiration dates, it may suggest traders are looking at the short-term trends right now.
2. MedAvail Holdings (NASDAQ: MDVL)
Shares of MDVL stock have surged over the last few weeks. This was thanks, in part, to closing a sizeable private offering earlier this month. MedAvail, a tech-based pharmacy company, secured roughly $40 million that it plans to put to work. Among the use of proceeds is funding for strategic initiatives. What does the options market look like for MDVL stock?
Like CEI stock, MedAvail’s nearest expiration date (May 20th) is seeing the most action today. In particular, the $2.50 and $5 strikes are heating up. The $5 Call option has fewer than 2,000 open interest contracts. Meanwhile, more than 5,600 have traded hands in the stock market today.
3. 22nd Century Group (NASDAQ: XXII)
Biotech company and low nicotine cigarette maker 22nd Century Group is in traders’ crosshairs right now. While action has been quiet this month, April 18th saw early action send XXII stock back above $2.20. There are a few things to consider with the company right now. First, 22nd Century received a notification from the Office of the Illinois Attorney General’s Tobacco Enforcement Bureau that its VLN line will get a listing in the Illinois Directory of Participating Manufacturers. That went into effect in April. Additionally, 22nd Century is set to report its next round of earnings in a few weeks on May 5th.
Traders seem to have started hedging some bets by the look of the options market right now. In particular, the May 20 $3 Calls and July 15th $2 Calls have seen the most action and have higher open interest levels.
4. Imperial Petroleum (NASDAQ: IMPP)
Like CEI stock, Imperial Petroleum was on our list of hot energy penny stocks last week. The momentum hasn’t cooled for IMPP stock either, as shares pop back above the $1.40 mark today. The ship-owning company provides petroleum products and crude oil to seaborne transportation services. Its recent round of earnings showed mixed results at the end of March. However, two new agreements were entered into last month and brought some optimism back to the stock. The company also declared a dividend to its Series A holders.
What is the options market saying about IMPP stock right now? The action is in the closest expiration date right now, May 20th. The $1.50 and $2 strike Call options have the highest levels of open interest and volume as of this article.
5. Up Fintech Holding Limited (NASDAQ: TIGR)
Financial technology stocks remain in focus even as popular assets, including Bitcoin and NFTs, have sunk in value. Needless to say, Up Fintech shares have been in consolidation mode since mid-March. The move came shortly after the company announced earnings for the 4th quarter and full-year 2021. Up Fintech saw revenue increase 91% year-over0=-year with client assets on its platform increasing by 7% over the same period to $17.1 billion.
Wu Tianhua, CEO of UP, explained, “While we face many respectable competitors in the local market, we believe our comprehensive product offering sets us apart; presently, our APP in Australia facilitates clients to trade stocks in Australia, The U.S., and Hong Kong, and we are one of only a select few firms to offer U.S. options trading.”
Speaking of options trading. TIGR stock’s option chain has gained momentum in the stock market today. In particular, the May 20th $5 Calls had just under 3,500 in Open Interest at the beginning of the April 18th session. Meanwhile, more than 10,000 contracts were traded by the time of this article.
More Penny Stocks Options Data To Digest
We’ll round out this list of penny stocks with a few more unusual options activity names:
6. DiDi Global Inc. (NYSE: DIDI)
China-based stocks, in general, have experienced significant volatility thanks to uncertainty about their listing status in the US. The ride-hailing company is preparing to delist from the NYSE. Regardless, that doesn’t seem to have deterred traders placing bullish bets in the options market. The April 22nd $2.50 Calls list up during the Monday session. More than 10,000 contracts were traded by the time this article was posted. Meanwhile, just 2,275 were showing in Open Interest
7. CTI Biopharma Corp. (NASDAQ: CTIC)
Breakout biotech penny stock CTI Biopharma remains a focus for traders this year. CTIC stock exploded earlier in 2022 thanks to news that the company’s Vonjo pacritinib myelofibrosis treatment was approved by the FDA. This became the first approved therapy that addressed the needs of patients with cytopenic myelofibrosis, according to CTI. Heading into the second half of the month, CTIC stock’s options chain is experiencing strong activity in the June 17th $5 Calls today. More than 10,000 contracts were traded at the time of this article.
Options Risk & 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 option’s value can fluctuate rapidly. This is why only specific traders with plenty of education in trading options choose to jump into these wild waters.
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