Most energy-related stocks are having their day in the sun on Monday. For investors in Imperial Petroleum (NASDAQ:IMPP), this is certainly the case. IMPP stock has more than doubled, rocketing 125% higher at the time of writing on impressive volume.
This move comes as oil prices surge to new highs not seen since 2o08. From a macroeconomic perspective, there’s certainly a lot to like about stocks in the energy sector right now. For companies like Imperial Petroleum with market capitalizations in the micro-cap category, perhaps even more so. After today’s move, Imperial Petroleum’s market capitalization still sits at around $35 million. Accordingly, investors seeking highly volatile trading vehicles to play this rally in energy prices certainly have a decent option with IMPP stock.
That said, there do appear to be other key drivers investors are watching with IMPP stock. Let’s dive in to see what those are.
What’s Behind Today’s Rally in IMPP Stock?
Imperial Petroleum is a company with a unique business model. It provides seaborne transportation services to a range of energy clients. These include refineries, producers and traders. Accordingly, demand for its business has been surging lately.
The higher oil prices go, particularly in the near term, the higher demand will be for Imperial Petroleum’s services. Today, calls for $200 oil via the options market have sent investors looking for alternative ways of playing this trade. One such interesting vehicle is IMPP stock.
Now, whether $200 oil materializes or not remains to be seen. Options volumes can sometimes reflect where traders see a specific commodity going. However, in many cases, these bets are simply hedges against “worst-case scenarios” that may or may not play out. That said, there could be significant demand for short-term oil storage in the near term. And today, investors are buckling in and betting on IMPP stock as an interesting way to gain leverage to this trade.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.