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4 Hot Penny Stocks To Buy Based On Bullish Bets By Options TradersJul 29th, 2022 21:09 EST
Want to find the best penny stocks to buy? I’m sure you do, and you’re not alone. Thanks to how cheap these stocks are (below $5), your average retail trader can take prominent share positions in them and leverage volatility to turn small sums into meaningful gains. First thing’s first, though. How do you find penny stocks to buy?
There are plenty of strategies you can use. Of course, a penny stocks screener can help you find stocks with unusual volume or ones approaching new 52-week highs. You could also take things a step further and hunt for low-float penny stocks or even stocks with high short interest. Data is king if you’re doing actual research.
Today we’re focusing on sentiment trading, and while volume and trading momentum could signal current interest, there are other data points traders look at. One of these is options volume. In particular, screening for stocks with unusual options activity has become a way for the market to see where “smart money” might be betting on specific stocks. If you’re brand new to options, check out the article Trading Options 101: A Beginner’s Guide. It will give you a good idea of some of the basics and the terminology used to explain certain things.
Penny Stocks To Buy: Bullish Bets By Options Traders
Not all penny stocks have options, and one of the reasons people trade options in the first place is because they’re cheaper than buying shares. But when you factor in penny stocks with options, there’s a whole new level of volatility and speculation to account for. On top of that, volume in Calls or volume in Puts doesn’t always mean a bullish or bearish outlook.
But from a fundamental perspective, a higher call or put volume is initially taken at face value when using it for speculation trading. Here are a few penny stocks with unusual options activity. Will big bets by options traders signal more upside in the near term?
Orbital Energy Group (NASDAQ: OEG)
Energy penny stocks have been on fire lately. Whether we’re talking about oil and gas or renewables, it’s been a big few days for the niche. Orbital Energy (OEG Stock Report) has gotten beaten up for months, but the last few days have been helped by this bullish trend in energy.
The company focuses on several areas of the industry. It develops and provides services for electrical power, telecom, and renewables. It may be the renewables angle that has helped give OEG stock a boost this week. Renewable energy stocks have heated up thanks to big moves from industry leaders like Enphase Energy (NASDAQ: ENPH) and SunRun (NASDAQ: RUN).
If you look at the last round of earnings from Orbital, you’ll see that its renewables business has grown significantly. In the first quarter of 2021, renewables accounted for $2.4 million in revenue. The first quarter of 2022 saw this figure explode to $14.5 million. The company expects full-year consolidated revenue to be between $375M to $425M and adjusted EBITDA from $38M to $43M. This reflects year-over-year revenue growth of 382%.
What do OEG stock options traders think?
Looking at the January 2024 Calls, you’ll notice considerably higher volume for the $2.50 strike compared to most other expiration dates at the same strike. There isn’t much volume in the option compared to open interest. But considering this is nearly two years away, it might be seen as unusual in this context.
W & T Offshore Inc. (NYSE: WTI)
This week W & T Offshore Inc. (WTI Stock Report) caught an explosive move jumping from $3.93 to highs of $5.06. The rise in energy prices hasn’t hurt things for related stocks, and W&T’s specialty is oil and natural gas. It has working interests in 47 fields and state waters with roughly 655,000 gross acres under lease.
As Q2 earnings season rages on, WTI stock’s results could come into focus. It is already coming off of a solid first quarter with a sales and EPS beat. For the second quarter, the company guided 1,325-1,450 MBbl Oil, 370-410 MBbl NGLs, and10,600-11750 MMcf Natural Gas. The company also presents at an upcoming conference hosted by EnerCom in August.
What do WTI stock options traders think?
Speaking of August, this is the expiration date in question with interesting options activity. Specifically, the $6 WTI calls saw more than double the amount of Open Interest traded on Friday. The OI sat at 1,136. Meanwhile, the volume was over 3,000 contracts.
Eos Energy Enterprises (NASDAQ: EOSE)
Energy is hot and certainly reflected in this list of penny stocks. Eos Energy Enterprises (EOSE Stock Report) is another name that has gained considerably over the last month. Shares began July trading under $1.30 and, by the final trading day’s close, reached highs of $3.28. The energy industry’s momentum helped carry some of the weight. But there were other things to account for, including securing a sizable contract that more than doubled the company’s backlog to over $460 million.
Early July saw Eos snag more than 1 GWh in new orders from Bridgelink Commodities, LLC and “a leading Northeast solar developer, “totaling 1.1 GWh of energy storage capacity to be delivered over the next three years. Its zinc-based energy storage systems are used by various industrial customers, including energy management systems, backup power, and maintenance.
What do EOSE stock options traders think?
The September $5 Calls are in question regarding EOSE stock. That’s because compared to open interest, the volume was seven times more, with 1,419 contracts traded by the end of the day. Something else to note is that Eos releases its second quarter 2022 financial results before the U.S. market opens on August 2, 2022.
Core Scientific Inc. (NASDAQ: CORZ)
Thanks to a strong rebound in the price of Bitcoin and other major cryptocurrencies, related stocks are back in focus. This also includes companies working on blockchain technology like Core Scientific Inc. (CORZ Stock Report). The company provides blockchain data centers and software solutions to its clients. Its current centers offer colocated digital asset mining and self-mining opportunities to its clients via its network of locations in Georgia, Kentucky, North Carolina, North Dakota, and Texas. There are also plans to begin operations in Oklahoma during the year’s second half.
In a big win earlier this week, Core announced an agreement to hos 75 MW of ASIC servers in a deal expected to generate $50 million in annual revenue at full deployment. “We remain focused on executing our 2022 plans to expand our capacity, support the Bitcoin Network’s continued growth and create value for all our stakeholders, despite current market challenges. We look forward to providing further details about our progress on August 11th, 2022, during our second-quarter earnings conference call,” explained CEO Mike Levitt. With earnings on the horizon, that’s another thing to keep track of if CORZ stock is on your watch list.
What do CORZ stock options traders think?
Right now, the most near-term contracts are in focus. The August 19th Calls have seen both usually high open interest and higher volume on Friday. The $2 and $2.50 Calls show this trend. With earnings coming up, it will be interesting to see if options bets are correct.