Unusual options activity is a tool that traders are finding valuable for penny stocks. It can offer important insights into the trading activity of large investors such as hedge funds and institutional investors. These investors have significant resources and access to information, which makes their trading activity an indicator of market sentiment. It can also suggest the potential for upcoming events that may affect the price of penny stocks.
When I and others notice trading activity on a specific penny stock options contract increase significantly, it is considered unusual. It may indicate that large investors are taking a position in that contract or, at the very least, traders are beginning to speculate on a direction. There’s also the chance that some hedging is going on depending on upcoming events like earnings or a major biotechnology data readout. This information can be helpful because it provides insight into which penny stocks these investors are looking at more closely.
In addition, unusual options activity can assist in identifying potential market trends or reversals. If traders notice trading activity on call options for a particular penny stock increase significantly, it may suggest that investors are bullish on the stock and expect its price to rise. Conversely, if trading activity on put options increases significantly, it may indicate that investors are bearish on the penny stock and anticipate its price to decline.
However, I would exercise caution when using unusual options activity as it does not guarantee profitable trades. I suggest always analyzing the underlying security and market conditions before taking a position in an options contract. Also, weigh the potential risks and rewards of using unusual options activity.
In this article, we look at more penny stocks with unusual options activity. We dive into any recent updates and look for upcoming events that may act as potential catalysts. This list of penny stocks will continue the list from the article Penny Stocks To Buy Now? 3 With Unusual Options Volume Today.
SoundHound AI Inc. (SOUN)
AI stocks and AI penny stocks have been red hot since ChatGPT captivated the tech world. Everything from predictive analytics to learning models have seen an uptick in interest. SoundHound has been one of the companies gaining momentum during the emergence of this trend as it focuses on advancing its voice AI platform.
Earlier this month, the company highlighted a new Chat AI product that allows brands and their customers to access multimodal voice assistant services. “SoundHound Chat AI ushers in a new phase of voice-enabled, conversational AI that used to only exist in science fiction,” explained Keyvan Mohajer, CEO and Co-Founder of SoundHound. “By combining the power of software engineering and machine learning with Generative AI, we can finally deliver the digital assistant experience users have been desiring for decades.”
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What are options traders looking at right now? The April 6th $2 strike call options saw the most significant boost in volume compared to open interest. In this case, more than 2,200 contracts traded compared to just 215 open.
BigBear AI Holdings (BBAI)
BigBear is another one of the AI penny stocks to watch this quarter. During the height of the AI surge, BBAI stock jumped to nearly $7 a share. As things have cooled, it has reset a bit, though it is still trading much higher year-to-date. Last week we discussed it on a list of short-squeeze penny stocks to watch, and since then, the market appears to have remained bullish, for now.
Besides beating sales estimates in its latest quarter, Bigbear has focused on narrowing costs. CFO Julie Peffer echoed this sentiment and discussed how the company anticipates a “substantially lower cash burn” and utilizes a $25 million financing from earlier this year to allow the company to target “growth investments judiciously.”
Where does this put BBAI stock on the list for options traders? If you look at the April 14th $2.50 Calls, you’ll see a significant volume compared to open interest. In this case, more than 6,300 contracts were traded compared to fewer than 100 open.
ViewRay Inc. (VRAY)
Radiation therapy system developer ViewRay saw an uptick in options volume this week. The move comes after a month-long battle that was consistently won by selling pressure instead of buying. The company announced earlier this month that the Czech Ministry of Health approved the purchase of its MRIdian system for advanced MRI-guided radiation therapy to rate cancer patients at the Military University Hospital Prague. The news had seemingly fallen short of expectations with minimal market reaction.
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However, heading into the new quarter, VRAY stock appears to have turned some heads. There weren’t any news headlines or filings to pair with the momentum on March 31st. However, the options activity was notable compared to other penny stocks. In particular, the May 19th $3.50 Calls saw more than 9,600 contracts traded compared to fewer than 3,000 open interest. Whether or not this is, in fact, a bullish bet, a hedge, or selling Calls is to be seen as 7,200 of those contracts were traded between the market, according to data from ThinkOrSwim.
Kinross Gold (KGC)
There’s no secret that gold stocks tend to perform well in high-inflationary environments. Kinross Gold stock has seen its share prices skyrocket over the last month. At the end of February, KGC shares were trading around $3.40, and at the end of March, they sat above $4.70. Other than the economic sentiment driving the stock and other gold stocks higher, Kinross has also continued reporting notable milestones.
In the company’s last update, CEO J. Paul Rollinson explained Kinross’ outlook saying, “As we have exited from Russia and Ghana and are developing our Great Bear project in Red Lake, Ontario, our portfolio is now more weighted in the Americas. We are excited about the Great Bear initial mineral resource estimate, which we announced earlier this week. We believe we have a world-class development project at Great Bear and two cornerstone production assets, Tasiast and Paracatu, that together produce over 50 per cent of our gold.”
Regarding options trading activity, the August 18th $8 Calls saw a boost in action, with more than 32,000 contracts traded. While there was already a sizeable Open Interest, at least 30,000 of the 32,000 were traded at the asking price of $0.08 at the time of the trade, according to data from ThinkOrSwim.
List Of Penny Stocks
- SoundHound AI Inc. (NASDAQ: SOUN)
- BigBear AI Holdings (NYSE: BBAI)
- ViewRay Inc. (NASDAQ: VRAY)
- Kinross Gold (NYSE: KGC)
- Opko Health Inc. (NASDAQ: OPK)
- BlackBerry Ltd. (NYSE: BB)
- Sirius XM Holdings (NASDAQ: SIRI)