These penny stocks have seen unusually bullish options activity while the stock market is down today. Thanks to bearish CPI data and concerns over hawkish Fed interest rate hikes, it’s interesting to see that there is some optimism left. Ironically, it has to do with several stocks under $5:
- Vroom Inc. (NASDAQ: VRM) | January 20, 2023 $2 Calls
- ironSource Ltd. (NYSE: IS) | September 16, 2022 $2.50 Calls
- UP Fintech Holding Limited (NASDAQ: TIGR) | October 21, 2022, $5 Calls
Those are the penny stocks with unusually bullish options volume today. In this article, we’ll take a closer look at what’s gone on with the companies and what might be some potential catalysts to keep in mind.
Penny Stocks To Buy Now [or avoid]
In the stock market today, there’s no shortage of volatility. The latest round of economic data and comments from several Federal Reserve presidents have put pressure on stocks. Kansas City Fed President Esther George made remarks earlier this week and gave her outlook on a fragile rate & inflationary environment.
She explained that “the case for continuing to remove policy accommodation is clear-cut” in light of some of the highest inflation in decades. “The pace at which this path unfolds will need to be carefully balanced against the state of the economy and financial markets…This is already a historically swift pace of rate increases for households and businesses to adapt to, and more abrupt changes in interest rates could create strains, either in the economy or financial markets,” George said.
Meanwhile, other Federal Reserve Presidents, including Raphael Bostic, echoed a more direct and grim response to the latest round of inflation data. “Everything is in play…today’s numbers suggest the trajectory is not moving in a positive way … How much I need to adapt is really the next question,” Bostic explained.
While sentiment like this added to the pessimistic view in the stock market this week, it hasn’t caused fear for those looking to buy penny stocks. The critical thing to remember is that volatility is a big proponent. Considering the higher levels of market shifts, day trading has become a favored method of making money trading. Let’s see if any of these bullish options bets mean longer-term potential.
Vroom Inc. (NASDAQ: VRM)
January 20, 2023 $2 Calls
Vroom Inc is no stranger to retail-trader-fueled breakouts. We have discussed the company plenty in the last few months as sentiment shifts for the auto industry continue driving volatility. Vroom has even been in the discussion for unusual options activity, which ultimately came to fruition this week. Our article “4 Penny Stocks Traders Are Betting Big On But Are They A Buy Now?” highlighted unusual activity in the July 15th $1.50 and $2 Calls. As of this week, VRM stock is trading within this range.
The company provides an eCommerce platform for buying and selling used vehicles and recently posted stronger than expected earnings for the first quarter. Sales came in at just over $930 million and beat estimates by a wider margin. “As we look forward, we intend to prioritize unit economics over growth, reduce operating expenses, and focus on four key initiatives to build a profitable business,” explained CEO Thomas Shortt in his Q1 update.
Is VRM Stock A Buy?
Now, options traders are betting on VRM stock based on recent unusual activity. As of this article, over 700 contracts have traded at the January 20, 2023, $2 strike Calls. There is also plenty of open interest throughout the Call options chain, as high as $15. It will be interesting to see if these long bullish bets pay off for VRM stock traders.
ironSource Ltd. (NYSE: IS)
September 16, 2022 $2.50 Calls
Shares of IronSource exploded this week on the back of a significant update. Unity (NYSE: U) announced that it entered into a definitive agreement for ironSource to merge with the tech company. One of the attractive aspects of IS to Unity is its business platform targeting mobile content creators looking to turn apps into scalable businesses.
According to the July 14the update, “The companies’ complementary offerings create a unique end-to-end platform that allows creators to create, publish, run, monetize, and grow live games and RT3D content seamlessly.”
Is IS Stock A Buy?
This week, several things have happened in the stock market following the ironSource acquisition news. One of those things was Cathie Wood’s Ark purchasing a million shares of U stock. Options traders were also betting on IS stock based on recent activity in the September 16, 2022, $2.50 Calls. Volume outpaced open interest as shares of the penny stock traded higher on Thursday.
UP Fintech Holding Limited (NASDAQ: TIGR)
October 21, 2022, $5 Calls
Despite the latest pullback in TIGR stock, the company remains a focus of traders heading into earnings season. UP Fintech is an online brokerage firm for global investors and is coming off a solid first quarter.
Results showed a significant increase in funded accounts. The company increased this figure to 703,000, up 87.1% from last year’s period. Meanwhile, non-trading-related operations also helped move the needle for TIGR stock.
“Our corporate businesses continue to perform despite the weak market backdrop. We underwrote 7 U.S. IPOs in the first quarter, making us one of the most active underwriters for U.S equity issuance. We also added 25 ESOP clients in the first quarter and serve 338 ESOP clients in total as of March 31, 2022. In wealth management, we continued to add new funds to our Fund Mall to provide users with diversified investment options,” said Wu Tianhua, CEO and Director of UP Fintech.
Is TIGR Stock A Buy?
Look at the options chains for TIGR stock, and you’ll see some bullish sentiment in the October 21, 2022, $5 strike call options. This options contract is assumed to be after UP Fintech’s next round of earnings and after the next Fed meeting. Whether or not this is the reasoning behind the bullish bet is to be seen. However, it’s worth noting all the same.
Are Penny Stocks Worth It?
The critical thing to remember about options trading is that volume doesn’t determine buying or selling. It shows activity, which could also include selling the options to open a position (similar to shorting). Nevertheless, understanding how to trade penny stocks and handle volatility are two essential things to have a handle on. This could make penny stocks worth the risk so long as you have a game plan and backstops set if trades don’t work in your favor.
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