Penny Stock Soaring on Patent Victory Over Apple

VirnetX stock is red-hot out of the gate, and VHC options traders are active

Aug 31, 2018 at 10:11 AM
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Shares of VirnetX Holding Corporation (NYSEAMERICAN:VHC) are up 11% to trade at $3.28 this morning, after a federal judge denied Apple's (AAPL) motion for a new trial in a patent dispute with the company. Further, the judge affirmed a jury verdict ordering Apple to pay VirnetX more than $502 million, and granted the latter's motion for supplemental damages. The cybersecurity firm said it is "extremely pleased" with the ruling, calling the damages "warranted due to the large amount of infringing Apple devices."

VHC stock volume is pacing for an annual high, and was earlier trading at $3.65 - set to top its 160-day moving average for the first time since mid-April, when the shares were celebrating the aforementioned Apple jury verdict. However, the stock has since pared its gains, and is back below the trendline that kept a lid on VHC shares since November.

A short squeeze could certainly add fuel to the penny stock's fire. Short interest represents more than 24% of VirnetX's total available float. In fact, at the equity's average daily trading volume, it would take roughly 67 sessions to buy back these bearish bets.

Meanwhile, VHC options are active out of the gate this morning. Specifically, within the first half-hour of trading, the stock has already seen more than 1,50 calls cross the tape -- 40 times the average intraday clip. It looks like some traders are expecting the security to topple $6 by the close on Friday, Oct. 19, buying to open the VHC October 6 calls.

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