This article titled:  Understanding Stock Prices and Values from Investopedia explains the basics of What Price Tells You

• Stock Price vs Stock Value
• When Price Matters
• What Price Tells You
• Market Cap and Share Price
• Factors Affecting Price and Value

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This morning I started my search for new trading ideas for the week of January 17th, beginning with checking the latest updates from MITs Wall Street Wiretapper, our unusual options activity scanner powered by a Neural Network.

The first scan I looked at was the “Top 10 Stocks within $2-$5 Over the Past 10 Days”.

This scan tells me which names between $2 and $5 have seen the most “unusual options activity” over the past 10 trading days.  Additionally, this scan tells us which names have the highest probability of outperforming their Implied Volatility.  

This is a scan I rarely use because it’s difficult to trade options on stocks priced < $10.

Here’s why – let’s look at the options tree in BBIG below.

BBIG last trade: $4.07.
BBIG Strike prices every $1 (the strike prices are more than 20% apart).

If BBIG (hypothetically) did a one-for-ten reverse split, the stock would trade at $40.70.  ($4.07*10=$40.70).   The option strikes would then be $40, $50, and $60.  

Are those options you would want to trade?  If the answer is no, you don’t want to trade $4, $5, and $6 strikes either.

This is the reason we rarely trade or share trades for stocks priced less than $10.

Let’s look at TWTR
TWTR last trade $38.44
TWTR strike prices every $1

The strikes on TWTR options are a lot more desirable for options traders

With that being said, let’s still look at BBIG using our High-Value Target chart.