Jeff Bishop’s portfolio is a service where I trade lower-priced stocks. While I do like to trade higher-priced tech stocks with significant liquidity in Total Alpha, I have other trading setups in my quiver that I use to trade small-cap stocks.

One recent trade was in OCUGEN INC (OCGN). OCGN has been in play this year because of its partnership with Indian drugmaker Bharat Biotech on commercializing a Covid-19 vaccine in the United States.

…..Understanding that WHO approval was probably close and having seen a base form, I took a position in the company a few weeks ago, on September 27 to be exact. This week the stock exploded, and whilst I took profits a little bit early, I was in at great prices that resulted in a great trade!

Ocugen, Inc (OCGN) is a clinical-stage biopharmaceutical company that is focused on developing gene therapies. It was a lowly minnow penny stock trading at less than 50c until it partnered with Indian drugmaker Bharat Biotech. Bharat Biotech developed a Covid 19 vaccine known as Covaxin. Ocugen partnered with Bharat on commercializing the vaccine in the U.S and Canada.

The Fundamentals

Being a voracious reader, I understood that WHO approval was possibly not far away for Covaxin. 10% of all doses administered in India with almost 100, 000, 000 of the 970,000,000 million doses were Covaxin.

The vaccine also proved to be pretty effective against variants such as Delta. Now in the United States, Covaxin might have too much competition from the likes of Moderna, Johnson and Johnson, and Pfizer but I felt that the upcoming news catalyst could be enough to see the stock trade significantly higher.

Why would positive developments for Covaxin in India and potentially with the WHO help Ocugen? I thought that some investors might think those regulatory wins could improve the chances that the vaccine secured Emergency Use Authorization (EUA) in Canada and eventual approval in the U.S.

Moreover, OCGN has a short float of 27.38%, according to Finviz, and is a known Meme stock, meaning that positive news could see a flood of retail buying, and we know from previous meme stocks that they can run. So we had an upcoming positive news catalyst, a huge short float, and an effective vaccine that was being administered.

When I make a trade, a moving average crossover is not enough for me to take a position. I need to like the fundamentals, understand the company and have a reason for the stock to see increased demand to push it higher.  OCGN had all of the above and a great technical setup as well.

The Technicals

OCGN had made a nice base from the $6.50 to $7.50 area. It had shown support since February, and the stock was making a flagpole pattern. It was getting tighter and tighter and had been consolidating for months. Now the general rule is, the longer a stock consolidates, the bigger the possible breakout. The old adage is the bigger the base, the bigger the space. Thus if the stock had good news, I knew it could have an explosive breakout based on the chart pattern, and it did.

The Trade

As you can see from my trading journal above, on September 27 I bought 5000 shares of OCGN at a price of $7.49. Any significant selloff below $6.50 and I would be out of the trade, but I planned to hold the stock into the upcoming news catalyst. I would sell into a breakout above $8 and into $9, looking to ride some for as long as I could.

On October 5 I got lucky pre-market and got filled on 3000 shares at $9. That is a good lesson on why I always set my orders with “GTC + extended hours”. You can see some crazy moves in pre-market and will get filled once in a while.

The major move happened this week, with OCGN receiving two pieces of good news. On Tuesday, India gave Emergency Use Authorization (EUA) to COVID-19 vaccine Covaxin for children ages two to 18. The next day, India’s NDTV reported that the vaccine was likely to soon receive a green light from the World Health Organization, according to inside sources.

I expected the stock to gap up and run on the news on Tuesday. Instead, it sold off into the open. Thinking it might be a sell-the-news event, I decided to get out of my position to lock in some profits. That ended up being a dumb move, as I basically sold the bottom at $8.05. Over the next 4 days, the stock ran to over $10 without me. It was a bit annoying, but that’s trading. I had a great trade Idea, kind of butchered it, but was still able to make a $5.6k profit.

Bottom Line

Jeff Bishop’s portfolio is a service where I trade lower-priced stocks.

When I make a trade, a moving average crossover is not enough for me to take a position. I need to like the fundamentals, understand the company and have a reason for the stock to see increased demand to push it higher.  

OCGN had all of the above and a great technical setup as well. I was able to enter the trade at great prices, and exit some of my position before the news catalyst hit and the rest after a news catalyst came out. Despite messing up the trade a little bit, getting in at great prices meant I was still able to make a great trade.