Best Penny Stocks To Buy Now
The stock market is hovering around 2022 lows, yet more than a few penny stocks are pushing higher. In this article, we look at a handful of names doing exactly this. One thing to consider is that risk is high now, thanks to general market conditions. So it’s important to weigh that against your trading strategy.
Are you looking for day trades or swing trades? Are you hunting for penny stocks to invest in or just some to flip before the closing bell? Identifying this before even placing your first trade is important. With that in mind, let’s look at 3 penny stocks to watch with unusual options activity today.
Penny Stocks To Watch
- Blue Apron Holdings (NYSE: APRN)
- ContextLogic Inc. (NASDAQ: WISH)
- American Virtual Cloud (NASDAQ: AVCT)
Blue Apron Holdings (NYSE: APRN)
Blue Apron Holdings is one of the popular short-squeeze penny stocks to watch this quarter. Shares exploded from the start of August to early September on the heels of bullish speculation. It isn’t the most heavily shorted penny stock anymore. But that doesn’t mean there isn’t a significant level of short interest in it. As of this article, Fintel.IO data shows the short float percentage on APRN stock sitting at nearly 38%. Meanwhile, other sources, including TDAmeritrade, have this figure higher at almost 50%.
While the stock market crash continues, APRN shares have begun rebounding from their recent pullback. As with most short squeezes, once the short interest gets covered, the lower volume due to the absence of short covering gives way to profit taking. At the start of the week, Blue Apron stock remains in its steady uptrend that began on Friday, just days after joining the United Nations Global Compact corporate sustainability initiative. CEO Linda Findley explained that Blue Apron is “a carbon-neutral meal-kit company that is focused on bringing incredible recipes to our customers while promoting planetary and dietary wellness for everyone.”
But this news has likely come secondary to technical trends in the stock market today. If you look at the options chain, the shorter-term Calls are back in focus with this week’s $5, $5.50, and $6 strike Call Options experiencing higher volume than open interest. This has helped bring a bit more bullish sentiment to the stock market today. We’ll have to see if this remains the case throughout the rest of the week.
Blue Apron stock was in focus earlier this month thanks to a large insider purchase. An amended 13D filing showed a larger shareholder, Joseph Sanberg, boosted his stake in the company. Specifically, the filings showed him having 27,623,755 or a roughly 51.3% stake.
ContextLogic Inc. (NASDAQ: WISH)
Like Blue Apron, ContextLogic is one of those household name stocks that most consumers are familiar with. In this case, it isn’t necessarily the corporate name but the website that it manages: Wish. The website known for selling low-priced goods saw its corresponding stock reflect a similar value in the market. This week WISH stock slumped to fresh record lows amid the latest management shakeup and mixed earnings.
Wish appointed Joe Yan as interim CEO. Yan has experience at companies including Google, Stripe, Alibaba, and Amazon. He was also the VP of Merchant Services for Wish. With this new placement, ContextLogic expects this to contribute to the company’s strategic turnaround plans to improve consumer experiences.
Wish missed sales estimates in its second quarter results but beat earnings per share expectations. Core marketplace revenues were down 86% year over year, product boost revenue slipped 78% during the same period, along with logistics revenues dropped 70%. It’s also worth pointing out that throughout 2022, the amount of insider selling has also raised some eyebrows. The majority of selling in September is attributed to Piotr Szulczewski, founder of Wish. Since the first Form 4 of the month, Szulczewski has sold over $8 million in WISH stock.
But that doesn’t seem to have deterred bullish bets on the penny stock. Like Blue Apron, Wish has seen short-term action in this week’s option chain. Specifically, the $1 Calls expiring on Friday have experienced the most significant level of volume, with more than 4,600 traded at the time of this article.
American Virtual Cloud (NASDAQ: AVCT)
One of the penny stocks with the highest options volume in the stock market today was American Virtual Cloud. More than 10,000 contracts were traded in the October 21 $0.50 Calls. AVCT stock has been trending over the last month thanks to bullish speculation and attention from the Reddit and Fintwit crowds.
It was also on our list of top penny stocks to watch before September, based on news that it’s exploring the sale of its entire business. There is also a leadership transition in motion that has raised the eyebrows of retail traders. In an update, earlier this year, chairman, Michael Tessler, explained, “I have enjoyed working with the AVCT board and management team. I wish the new management team well as it works with the board to consider the range of possible strategic alternatives to optimize the value of the entity.”
In addition to the market momentum and options activity, AVCT stock is on the list of short squeeze names to watch. It doesn’t have as large of a short as APRN stock, but with Fintel showing roughly 18% and TDAmeritrade reporting over a 21% short float, traders are circulating the data as a high point for the penny stock.
How Does Options Activity Factor Into Your Trading?
If you’re new to trading options, here’s some information from the article Trading Options 101: A Beginner’s Guide, you might find helpful:
“An options contract offers the buyer the opportunity to buy or sell the underlying asset depending on the type of contract they hold. Unlike futures, the holder is not required to purchase or sell the asset if they decide against it. Each contract will have a specific expiration date by which the holder must exercise their option.
The options contract offers buyers two types of options concerning rights that can be acquired with varying options contracts: Call options give buyers options in relation to purchasing stocks at a stipulated time in the future. In contrast, Puts offer them options regarding selling a certain amount of shares they own at a particular time in the future.”
It’s important to remember that not all volume is buying volume, and options can be “shorted” by ‘selling to open’ a position. Generally speaking, traders will use Call volume, Put volume, and open interest to determine where sentiment lies. So at the end of the day, this is typically a way to speculate on where the market is placing its bets on certain stocks.
Want more info on trading penny stocks, in general? Check out some of these articles: