One of the most frequently asked questions daily is, “What are the best penny stocks to buy now?” This is, of course, subjective to the individual traders. But the process to find them can be similar, and it all starts with building a list of penny stocks.
You can hunt for stocks with news, stocks with high trading volume, companies seeing unusual activity in their options chains, insider trading stocks, short squeeze stocks, you name it. Make sure you understand the risk/reward of researching each, and then begin to narrow your search.
With CPI data from April confirming that inflation may be slowing down, there’s a bit more risk-on sentiment in the stock market today. CORE CPI Month over Month and Year over Year and headline CPI Month over Month came in line with expectations.
Meanwhile, headline CPI Year over Year was below expectations and helped prompt the bullishness during Wednesday’s early session. In this article, we look at a handful of cheap stocks with unusual options activity. The topic has grown in interest since we first began discussing the idea. If you’re new to options, check out our article “Trading Options 101: A Beginner’s Guide.”
Penny Stocks & Unusual Options Activity
Traders use unusual options activity to find potentially bullish or bearish sentiment. They may coincide with upcoming events or pending milestones. These “events” can be confirmed or speculated on.
For example, we found unusual options activity in a particular biotechnology stock earlier this year. The options chain was about one month in the future, and the particular expiration date was the closest date to a pending clinical study data readout.
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The company ultimately reported mixed data, and shares pulled back after. Leading up to the date, however, the biotech penny stock rallied. It’s not always the case with regard to unusual options data. Most of the time, speculation is a more significant factor at play. What traders think might happen tends to drive the action, which presents a very high-risk environment. Nevertheless, this alternative data might be helpful for traders looking for such a scenario.
Penny Stocks To Watch
Gamida Cell Ltd. (GMDA)
Shares of Gamida Cell have made a substantial rebound over the last month. The cell therapy company has focused efforts on turning cells into treatment candidates. Its Omisirge (omidubicel) and the pending commercial launch have been a core point of focus for traders since Gamida’s March update. Despite reporting worse-than-expected quarterly results, it alluded to more positive interactions with the FDA regarding this particular candidate.
Fast-forward to April, and the FDA approved Omisirge as a new donor source for allogeneic stem cell transplant. “FDA approval of Omisirge is a major advancement in the treatment of patients with hematologic malignancies that we believe may increase access to stem cell transplant and help improve patient outcomes,” said Abbey Jenkins, President, and Chief Executive Officer of Gamida Cell.
Fresh capital to the tune of $23 million is also being factored into the equation. Gamida outlined its plan to use the funding for numerous initiatives, including commercialization activities and continued clinical development of other candidates like its GDA-201 platform.
Looking at the options chain for GMDA stock, you’ll see some interesting volume in the September 15th $2.50 Calls. 5,900 contracts had already been traded as of this article, with more than 40,000 open interest.
Eos Energy Enterprises Inc. (EOSE)
Eos Energy develops zinc-based energy storage systems. With clean energy stocks remaining a core focus in the last few weeks, EOSE stock has seen an uptick in activity and stock price. Its Znyth battery is designed as a direct competitor to lithium-ion batteries.
The latest round of earnings helped give EOSE stock a boost this week. While it missed earnings per share estimates, sales beat expectations by a significant margin. Eos reported $8.84 million, while the Street anticipated $3.1 million. Eos Chief Executive Officer Joe Mastrangelo said, “The Eos team delivered a solid first quarter, with continued backlog growth, strong manufacturing performance, and 1 GWh of discharged energy in the field, all while raising additional capital that enables us to scale operations and accelerate our market competitiveness.”
Those looking for unusual options activity in EOSE stock can pull up the November expiration date. In this case, the $5 Calls for November 17th saw the most significant jump in volume, with more than 5,300 contracts. There were also more than 15,000 open interest contracts.
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Cano Health Inc. (CANO)
Primary care provider and population health company Cano Health saw its shares pop in the stock market today. Attention was already on the company toward the beginning of April. Former directors said they would act to bring changes to the company, including replacing its CEO and selling off non-core assets.
This week, Cano reported its latest results from the first quarter of 2023. It beat earnings per share estimates and sales estimates for the quarter. Management also addressed several core changes that have been made this year.
Dr. Marlow Hernandez, Cano Health’s Chief Executive Officer, explained, “Over the past six months, our management team has implemented a range of initiatives to improve our cost structure, improve operating cash flow, and simplify and optimize our business model. The first quarter results reflect meaningful operating efficiencies, and while we recognize there is more work to be done, as we continue to execute on our action plan, we expect our earnings trajectory to improve and accelerate, particularly in the second half of the year.”
In looking at the CANO stock options chain, May and July are particularly interesting. The May 19th and July 21st expiration dates for the $1.50 strike are the ones seeing heightened action today. As of this article, the volume is over 4,000 and over 3,800, respectively.
List of Penny Stocks To Watch with Unusual Options Action
- Gamida Cell Ltd. (NASDAQ: GMDA)
- EOS Energy Enterprises Inc. (NASDAQ: EOSE)
- Cano Health Inc. (NYSE: CANO)