So Cheap You Buy the Stock

While watching my favorite day time show on CNBC, the Halftime Report, they ended with final trades. Brian Kelly sounds like a fool most of the time between his predictions of BitCoin and Roku, but Friday he said CRBC. I typed it in the chart and a large green candle appeared as you can see the chart to the right. Starting at 7.40-7.50 range was interesting to me.

I quickly bought 500 shares at 7.67 and it continued to run up as you can see in the next chart. I have see plenty of run ups like this and many times they hit a ceiling after a quick run. Sure enough that is what appeared to happen as it failed to go above 8.40. I quickly sold at market for 8.22 for a modest profit of $280 in about 10 minutes.

As expected, it slowly bled away for the rest of the afternoon to finish up at 7.85. Due to the rapid movement, low stock price, limited coverage, I would not recommend trading options on a stock like this. You could do it and probably make way more money, but you could also be stuck holding it into a losing position due to lack of buyers after you paid more than it was worth due to lack of sellers when you bought your options.

I attempted to buy put options on the downside when I realized it wasn't even going to retest the peak. When it was trading for 8.10, I bought 5 7.50 7/19/19 put options with a bid of .05 and ask of .10. At market, the order filled at .10.

I then placed a sell order with a limit of .20. The options bid went up to .10 and the ask went to .20, but came down to .15. By the end of the day, I sold at market price for .13. Not enough profit to really be concerned with considering the risk.

Without research, you might be asking why didn't I buy $8 strike put options for next week or even with a $9 strike price. The first expiration date available was 7/19/19 and the strike prices were 5.0, 7.50 and 10.0. Given the limited options available, you know the volume is not that high. Sellers are in control on the way up and the buyers are in control on the way down.

This strategy is used by day traders and penny stocks. It is not practical if you don't have the cash to pull it off. It is important to have some cash available when opportunity arises. I had the cash available to buy 1000 and probably should have done it and would be up $560 in just that trade. If you only bought 100 shares, made your entries as I did, you would be up only $56.

Opportunities like this happen almost every day. You just need the right scanners, or chat rooms with someone recognizing it as it happens.