Finding Top Penny Stocks to Buy Using Unusual Options Volume
A penny stock refers to a small-cap stock trading for less than $5 per share. What are penny stocks, and why should traders care about them? Penny stocks often see huge percentage moves, both up and down. This brings opportunity but also risks. One strategy to find top penny stocks to buy is locating ones with a sudden surge of options trading volume compared to normal levels.
Options contracts allow traders to bet on whether a stock will go up or down. The volume shows how many contracts are being traded. When options volume increases sharply for a penny stock, it signals traders have an interest in major moves coming.
How to Use Options Volume to Find Penny Stock Opportunities
First, scan for stocks under $5 with unusually high options volume relative to norms. Next, check if most of the activity is Call option contracts or Put options contracts. If the strike prices are above current levels, it shows traders may be speculating on further gains.
Now, research fundamentals and news. What might drive a major upside that has traders so interested? Find technical chart confirmations, too, like uptrends and breakouts. Use analysis to identify top penny stocks to buy and set buy and sell targets to manage risk and reward.
If trader activity is correct, the extra interest itself can impact directional moves for cheap stocks. But these are riskier companies by nature. So, while the best penny stocks to buy can exponentially multiply profits, they have stop losses in place for downside protection as well.
Tips for Trading Penny Stocks
Penny stocks this week showing extreme options volume indicate active trader interest. But don’t rely on volume alone. Vet fundamentals and technical charts, too, for confirmation. Target penny stocks under $1 with breakthrough business catalysts in play for maximum chance of major moves higher. Set goals for taking profits on top penny stocks to buy and have exit plans in case the price moves the wrong way.
Unusual options volume can tip traders off to penny stocks that may soon make major moves. Dig deeper into company events, financials, and stock charts to confirm sound trade candidates. Use scanner tools to efficiently locate penny stocks with spikes in options volume relative to norms signaling extra trader interest. In this article, we look at a few to watch in the stock market today.
- Sabre Corporation (NASDAQ: SABR)
- Fisker Inc. (NYSE: FSR)
- TeraWulf Inc. (NASDAQ: WULF)
- Virgin Galactic Holdings (NYSE: SPCE)
Sabre Corporation (SABR)
This company is a developer of travel technology. It recently renewed its agreement with lastminute.com, a European travel tech leader. Sabre announced a multi-year renewal with lastminute.com. This agreement focuses on enhancing customer experiences using Sabre’s advanced shopping and virtual payment solutions, aiming to improve itinerary customization and booking processes.
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Luca Concone, CEO, lastminute.com explained, “We are in a strategic partnership that drives technology innovation to help travel companies increase customer loyalty and drive revenue, and in turn are creating a turn-key travel planning and booking experience for the end user.”
What’s going on with SABR options? The focus today is on the January 19, 2024, $4.50 Calls. More than 7,000 contracts traded compare to fewer than 3,000 in Open Interest.
Fisker Inc. (FSR)
Fisker Inc. is a California-based electric vehicle manufacturer creating sustainable, high-performance electric vehicles. While this may be the focus of the company, its share price has been far from “high-performing” this year. FSR stock has been in a freefall and looking for support since early October.
The company updated its business strategy, emphasizing increased delivery rates and market expansion. They overcame initial logistic challenges, notably in the US and Europe. The company opened new facilities, including its first lounge in New York. They are commencing vehicle deliveries in Canada and have enhanced customer outreach. Fisker is adjusting its 2023 production guidance for financial flexibility and has made significant leadership hires.
If you’re looking for unusual options activity, FSR stock might be one of the names on your list. In this case, the $15 strike Calls expiring January 17, 2025 are gaining attention. While there is a significant amount of Open Interest, daily volume has also ticked higher. More than 6,190 contracts were traded at the time of this update.
TeraWulf Inc. (WULF)
TeraWulf specializes in environmentally sustainable Bitcoin mining. They focus on using zero-carbon energy in the United States. What might have heads turning is what the company recently announced. It reported its November 2023 production and operations update. They highlighted an increase in self-mined bitcoins, indicating efficient operations.
In total, self-mined 323 BTC in November for a total of 3,067 BTC self-mined year-to-date. The company’s Lake Mariner and Nautilus Cryptomine facilities also showed strong performance. Their commitment to clean energy bitcoin mining is a core aspect of their operations.
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With Bitcoin prices surging this month, related stocks, including WULF stock, have gained momentum. There’s also significant speculation buzzing about the industry. That has translated to the options market. In this case, WULF stock’s $3 strike Calls expiring in February 2024. There is currently more than 19,000 Open Interest contracts. However, there is also more than 5,000 contracts traded so far today.
Virgin Galactic Holdings (SPCE)
Virgin Galactic focuses on human spaceflight for private individuals and researchers. It operates advanced air and space vehicles, aiming to connect the world with the experience of space travel. While SPCE stock touched down to new 52-week lows a few weeks ago, earnings have fired up the jets again.
Virgin announced its third-quarter financial results for 2023, revealing a strong cash position with approximately $1.1 billion in cash, equivalents, and marketable securities. This was a significant increase from the second quarter. The company’s revenue stood at $1.7 million, primarily driven by commercial spaceflight and membership fees. It also marked a growth from $0.8 million in the same quarter of the previous year.
Business updates included plans for the ‘Galactic 06’ spaceflight mission in January 2024 and the opening of a spaceship factory in Phoenix, Arizona, by mid-2024, with the Delta Class spaceship production schedule on track for 2026. For the fourth quarter of 2023, Virgin Galactic forecasts revenue of approximately $3 million and anticipates a free cash flow in the range of negative $125 to $135 million.
What’s going on with SPCE options? The July 19, 2024, Calls have gained the most volume in the stock market today. More than 3,000 contracts were traded at the time of this update. There are also less than 1,100 in Open Interest.
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