Is BNGO Undervalued In The Short Term?
BNGO
RUTNNDQUSD
In my previous articles I have talked about the fundamentals of BNGO and how I believe it is a strong company in the long term. For this reason I am choosing to hold a long position on BNGO. I added more shares at $4.00 today, increasing my long term holdings, and ability to sell covered calls. I trust that management will continue to grow the company, and that the future will be bright.
That being said, in the short term investors must find a way to make money in the rocky price movement of BNGO's stock price. We will speaking in a three month time frame for majority of this article. BNGO has faced a steady decline over the last few months with very little chance of breaking out, but on November 24, 2021 the price appeared to stop, with a huge influx of buyers into the price. this came after the stock began to free fall triggering limit buys to kick in. Everyday positive news comes out on BNGO and yet the price continues to decline, this causes fear into buying in. The large influx of buying suggests that people believe in the company, but are nervous about the short term potential of the company. Will the price continue to go down? I believe we will know within the next 2 weeks. With industry peers continuing to grow in price, the RUT (marked in orange) hasn't felt the same decline as BNGO in the last month, and has instead turned rather positive, suggesting momentum may be shifting. If BNGO can hop on the momentum shift of small cap stocks, the price may pull out of this down trend. We must also consider the NSADAQ which has felt a pull back since the start of November. With the overall market feeling the effects of a down turn, it is no surprise a stock so price elastic would be affected. after considering all these implications, we can realize that the price of BNGO is heavily based off the buyer mindset. If the next two weeks are good for both the RUT and NDQ, BNGO will rally along, if not BNGO will continue to fall as seller pile in and buyers dwindle out.
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett
As today (November 29 , 2021 comes to a close, it appears BNGO has sold off more than it has been bought on the day, which is the first time since July 14, 2021. The latter date signaled the start of the steady decline we have seen. Is this an indicator of the continuation of tough times ahead, or is this the lack patience investors have, who will regret the move in the short term? Although times are uncertain, investors should always plan to hold for the long term, traders may come and go, and the bulls will always be there, but by protecting yourself against downside loss, BNGO should be the least of investors worries.
I am currently selling covered calls against my position on a 45 - 100 day basis, I am doing this to remain profitable on a diving stock. I am holding put options below the current price as a way to hedge against loss, and a major free fall back to 1$ or below. I bought more shares today as a way to further increase my ability to sell covered calls. I am unaffected by the short term price movement of the stock based off my suggested positions below.
Current Positions In BNGO:
Stock positions @5.97
Stock Positions @4.00
Short Call options @1.21 for a strike of $5, for 21-01-2022.
Long Put options @0.22 for a strike of $4, for 17-12-2021. This is to hedge against short term downside lost.
Long Put Options @0. 05 for a strike of $2, for 21-01-2022. to protect against a major free fall in price.
Short Call options @0.21 for a strike of $6, for 21-01-2022. This is my most recent addition to continue generating income on my long position- and to help pay for the continuation of purchasing put options against a free fall.
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