Best Penny Stocks to buy? 5 with massive bullish option volume today | News
When you think of penny stocks, options rarely come to mind. At least that’s according to some stock market traders today. One of the reasons they buy penny stocks primarily involves raising small amounts of money in exchange for greater upside potential. Options are a cheaper way for investors to theoretically control more shares of higher priced stocks without having the capital requirements to do so.
Believe it or not, many penny stocks also have options. Used as a speculative asset, some traders will look at options statistics to gauge bullish or bearish sentiment on specific stocks. Today we are looking at some penny stocks with abnormally high levels of call buying activity. Although this is not a guarantee that the underlying stock will rise, it may be something to consider when looking for the best penny stocks to buy based on retail sentiment.
Best Penny Stocks to buy?
- Camber Energy Inc. (NYSE: IEC)
- FuboTV Inc. (NYSE: FUBO)
- Tilray Inc. Brands (NASDAQ: TLRY)
- Mullen Automotive Inc. (NASDAQ: MULN)
- Paysafe Ltd (NYSE: PSFE)
Penny Stocks, options trading, best stocks to buy
It doesn’t matter what stock price you are looking to buy. It’s more about the strategy you use to formulate your business thesis. When it comes to options volume, you can see things like open interest (O/I), volume, and whether the volume relates to specific strike prices with calls or puts. Generally speaking, an immediate assumption is that higher call volume means traders are bullish, and sell volume means traders are bearish. But just like stocks, you can also “sell short” or “sell to open” your trade. Different options trading strategies allow you to take advantage of specific trends.
From collecting a premium when stocks go down to capitalizing on sideways trading trends, options offer different ways to make money in the stock market. For this reason, it is essential to understand that the face value of a high buying or selling volume does not necessarily mean that a bullish or bearish movement will come next. However, this data can be useful from a more general perspective and assuming you are going to be using more than options volume as a gauge for trading penny stocks. Today we are looking at a handful of penny stocks with unusually high call volume. Are they a purchase?
1. Camber Energy Inc. (NYSE: CEI)
Energy values are warming up again. Even with the stock market down this week, you can count more than a few energy penny stocks on the rise. Camber Energy is one of those cheap stocks to watch and has become something of a fan favorite among retail traders.
What does Camber Energy do? The company provides power and energy solutions to North American energy customers. The company has interests in US oil and gas assets and has remained a priority for those looking for cheap energy stocks to trade.
This week, CIS stocks made a substantial rebound along with the rest of the sector. On Friday, the energy penny stock climbed back above the $0.70 mark for the first time since Tuesday. What is the CEI stock options chain saying right now? If you look at next week’s May 20 call options, you will see a significant amount of open interest and volume. The highest levels are currently at the $1 calls.
2. FuboTV Inc. (NYSE: FUBO)
Traders have had a love/hate relationship with FuboTV for the past few months. It was an uninterrupted barrage of selling as Fubo battled bearish stock market sentiment. We even discussed his potential to become a penny stock last month. As fate would have it, FUBO stock plunged into sub-$5 territory soon after.
Despite this and in light of some negative sentiment in streaming entertainment stocks, FUBO stocks have managed to rebound over the past two sessions. Even after a bearish outlook from the company, traders seem to have adopted a more bullish tone on the stock. The options chain is showing some short-term optimism based on the volume of calls today.
Specifically, the $3.50 calls on May 20 (next week) have drawn the most attention. Before the session, there were less than 2,000 O/Is. At the time of this article, more than 37,000 contracts have already been negotiated. In second place, FUBO stock’s $4 calls also saw a significant increase in volume from the O/I.
3. Tilray Brands Inc. (NASDAQ: TLRY)
Like streaming entertainment stocks, marijuana stocks also had a bad reaction in the stock market. The failure to put in place new legislation in the United States and a series of broken promises have damaged the reputation of the cannabis industry. Despite this, investors remained hopeful in the long-term prospects of this commercial crop.
Tilray Brands has become somewhat of a hot spot for meme stock traders. TLRY shares have been included in the stock mix that Reddit traders favored during the AMC/GME pandemic rally. This week, TLRY rebounded from hitting a 52-week low as traders look for “oversold” stocks. In a report by Barron earlier this month, Tilray was highlighted among the names the New Jersey State Common Pension Fund D bought. The Fund also grabbed shares of companies like Uber and Advanced Micro Devices.
The company’s recent results also appear to have brought some optimism to the market. It reported revenue growth of 23% for its third fiscal quarter. Tilray also noted that international cannabis revenues jumped 4,000% year over year. Although it remains a penny stock, the company’s earnings remained a bullish driver. Tilray reported gross profit of $40 million on $152 million in revenue.
Once again, the May 20 options chain is in focus. However, it might suggest a mixed feeling. For starters, there is far more call volume on Fridays than sell volume. In particular, the May 20 call strikes at $4.50, $5 and $5.50 are at issue. As for the puts, there is a glaring O/I figure at the $4 strike put.
4. Mullen Automotive Inc. (NASDAQ: MULN)
Like Camber, Mullen Automotive has become popular with retailers and Reddit marketers this year. Automaker EV caught the eye in the first quarter after management expressed strong optimism about its growth prospects. However, MULN’s stock fell back to earth after researchers from Hindenburg Research discussed how Mullen would not be able to deliver on the multiple “big promises” made. Notorious for its short-sighted view of equities, in general, the market struggled between speculation, pessimistic sentiment and a general bearish trend in major indices.
However, things seem to have bounced back this week after Mullen’s latest update. It released a preliminary summary of second-quarter financial results. Quarter after quarter, cash and cash equivalents are over $65 million. Meanwhile, the company saw a more than 10% drop in notes payable.
Most notably, Mullen has signed a proposal with Thurner Design for the development of the Mullen FIVE RS vehicle, a high-performance EV sports crossover vehicle offering nearly 1,100 HP, 0-60 mph in just 1.95 seconds and a top speed of 200 mph. According to the company, the Thurner Design team is responsible for shaping and leading designs and brands such as Rolls-Royce Motorcars, Bentley Motors, Bugatti, Porsche, Lamborghini, Aston Martin and Mullen Automotive.
There was a substantial volume of call options at the $1 strike levels expiring on May 20, May 27 and June 3. The O/I was significantly weaker at the start of the day as options volume exceeded these numbers.
5. Paysafe Ltd. (NYSE:PSFE)
Payments company Paysafe turned a few heads on the stock market today. Following the announcement of a global payment partnership with Playtech, the company’s payment solutions will now have additional offerings in iGaming operations.
The company had come under intense selling pressure following its recent earnings. But that seems to have calmed down on Friday. PSFE stock hit early highs of $2.36 during the morning session, up from pre-market lows of $1.81 on Thursday. It may also be interesting to note the volume of options today. In particular, the market looks torn from the $2 strike. Call and sell volumes are roughly at the same level right now. Open interest is also at relative parity for the May 20 expiry.
Final Thoughts on Penny Stocks
Penny Stocks can be worth the risk if you know what you are doing. Understanding how to navigate volatile trading environments is essential. But, using data to your advantage can also become an asset. Options volume, like insider trading reports, can be a way to gauge sentiment. It’s not the only way to do it, and there are no guarantees in the market. However, if you are looking for penny stocks with unusual options activity, these are just a few of the names that have been turning heads in the stock market today.