Penny stocks are generally considered to be stocks to buy under $5. Most traders, however, will hunt for much cheaper equities in hopes of capitalizing on higher volatility. No matter your focus, the goal is the same: make money trading. But first, you need to know what you’re looking for and understand how to find target stocks to watch or buy. Some will use technical analysis in trading; others will look for news or company filings.
Meanwhile, there are other ways to find prospective penny stocks to buy, and today we look at one of these ways. This article delves deeper into penny stocks with unusual options activity. Similar to insider trading, options action has been used as a gauge by traders for understanding sentiment in specific stocks.
If you understand how to trade options, you know that all of the Call or Put buying doesn’t necessarily mean traders are overly bullish or bearish. But from a general point of view, it could be used as a high-level gauge that “something” is going on during times of unusual activity.
3 Penny Stocks To Watch
- Blue Apron (NYSE: APRN)
- Avaya Holdings Corp. (NYSE: AVYA)
- Denison Mines Corporation (NYSEAMERICAN: DNN)
Blue Apron (NYSE: APRN)
Shares of Blue Apron have been on plenty of penny stocks lists this year. In most cases, the company’s short interest was the primary catalyst to prompt attention from retail traders. On more than one occasion, APRN stock surged over the course of a few weeks, thanks to short squeezes. But look at any APRN stock chart, and you’ll see that those moves weren’t sustainable (as most short squeezes happen to be). Nevertheless, it hasn’t stopped the market from keeping it on the watch list for another potential squeeze.
In the meantime, the company itself has managed to make strides in expanding its business & reach new customers. Earlier this month, the company went beyond its membership and subscriber model to include chef-curated meals for sale on the US Amazon store. Customers don’t need a subscription plan to purchase the kits; according to management, it presents a way for Amazon customers to access easily prepared recipes.
[Read More] 5 Short Squeeze Penny Stocks To Buy For Under $5 Right NowAPRN Unusual Options Activity
This week, APRN stock experienced some unusual options activity. The December 16th $5 Call contracts saw a boost of volume to more than 2,690. While it wasn’t more significant than the Open Interest at the time, it was the highest options volume across all other strikes and expirations as of the time of this article.
Avaya Holdings Corp. (NYSE: AVYA)
Communication solutions provider Avaya is another one of the penny stocks to watch with unusual options activity this week. The company was recently named a Leader in The Aragon Research Globe for Unified Communications and Collaboration UC&C 2022. In response to the achievement, Todd Zerbe, Senior Vice President of Engineering, Avaya explained, “Through Avaya’s innovation model, we can meet customers where they are now in their deployments with cloud, on-premises, and hybrid offerings that fit their specific needs.”
Other than this headline, not much has been released by the company in terms of news. Recent filings show some shifts in the company’s Board and management team. But the general focus of the market appears to have been more technical than anything. The idea of “short squeeze stocks” has attracted traders’ attention hunting for volatile stocks. In this case, AVYA shows a short float percentage of over 25% via Fintel.IO & TDAmeritrade data. The addition of some unusual options active may have also prompted some attention in the stock market recently.
In this case, you’ve got to look to next year and the January 20th, 2023, options chain. On Thursday, more than 11,900 contracts were traded compared to just 484 Open in the $2.50 Calls.
Denison Mines Corporation (NYSEAMERICAN: DNN)
Energy prices have skyrocketed this year. No other place right now has felt that strain more than in Europe. As portions of the Eurozone are heading into recession, the future is unclear as to further pressures on its economy.
Managing director of the International Monetary Fund, Kristalina Georgieva, has said, “One year ago, we were recovering from COVID, and we finished with over 6% global growth. And then two shocks: Omicron and Russia’s war in Ukraine have not only interrupted the recovery but reversed it…The number one priority [is] to fight and win against inflation. What does that mean? Tightening financial conditions. Interest rates are going up.”
In light of this, some have speculated on other energy sources besides traditional oil or natural gas. Nuclear power has come into focus in light of this speculation, and companies like Denison Mines have gained attention. Denison is a uranium exploration and development company with interests in Saskatchewan, Canada.
This week Denison announced a regulatory milestone for its Wheeler River. The company submitted a draft of its Environmental Impact Statement to the Saskatchewan Ministry of Environment and the Canadian Nuclear Safety Commission. David Cates, Denison’s President & CEO, stated, “Our assessments indicate that the Project has fewer residual effects remaining after mitigation when compared to conventional open pit or underground uranium mining and milling operations.”
Regarding unusual options activity, the 2023 January and March expiration dates are in focus with the $2 and $2.50 and $2.50 and $3, respectively. It looks like these were done as Vertical Spreads. This type of options strategy involves starting a long (buying) and a short position (selling) at the same time and with the same underlying asset and expiration at different strike prices.
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