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During the coronavirus pandemic, Novavax came into a new level of prominence as one of the leading companies to race toward a first-to-market vaccine.
How to Buy Novavax (NASDAQ: NVAX) Stock
As an established company trading on a major exchange, Novavax stock is relatively easy to find and purchase. The major steps in buying Novavax are finding a brokerage, locating the correct ticker symbol (NVAX) and executing the purchase. Each stock that you purchase using these steps gives you control over 1 share of the Novavax company.
You can also purchase options contracts, which allow you to control 100 shares of Novavax stock per contract. Options have an advantage — the upfront cost of purchasing 1 options contract (controlling 100 shares) costs much less than buying 100 shares outright. Options do have other characteristics you should be aware of, but you should have all of your tools available when making a decision on how to invest.
Below we will go over how to purchase options contracts on Novavax.
Pick a Brokerage
You have more choices than ever when it comes to picking a brokerage. On the surface they may look the same, but there are some things you should know before committing your hard-earned money to one of them.
- Uptime: Make sure that the broker you choose has an uptime guarantee or an ironclad record of stability during periods of high activity. It does no good if you only have access to your trading portfolio when the market is quiet. You may want to take advantage of a trading opportunity during volatile trading days, and a brokerage that gives you lag or doesn’t let you log on would be a very frustrating experience.
- Execution time: If you take the time to research a winning strategy, you definitely do not want to miss the trade because of bad execution on the part of your broker. If your broker has execution lag, you can experience slippage when buying or selling stocks. Slippage means that your trade executes at a worse price than you planned because of timing misfires or other errors. Limit orders can stop slippage but you may completely miss the trade.
- Good user interface: You might be surprised at how many people get into bad trades because of a misplaced keystroke. Broker interfaces should be easy to use so that you do not mistake one action for another. They should also incorporate review pages to give you time to correct mistakes in your order. It only takes 1 mistake to buy 1,000 shares of Novavax instead of 100.
Now that you have the basics of picking a platform, let’s go through the basics of buying a Novavax options contract. (You can also sell options, but we’ll stick to buying for the sake of simplicity.) An options contract includes a strike price and an expiration date to define the price and time frame that you agree to control shares of Novavax.
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Choose Strike Price
The price of Novavax options will usually move in tandem with the price of Novavax stock. The price of a call option will go up as Novavax stock price goes up and vice versa. The price of a put option will go down as Novavax goes up and vice versa.
First, choose the type of option you want to buy. Buying a call option is bullish; buying a put option is bearish.
Once you choose your option type, then you will choose your strike price. The strike price is the price at which that Novavax option can be exercised. If an option is in-the-money on its expiration date, it will be exercised. If a call option is exercised, you will call away 100 Novavax shares per contract. If a put option is exercised, you will be responsible for delivering 100 Novavax shares per contract to the options writer. Keep in mind that you can sell an option before the expiration date for a profit or for a loss.
Choose Expiration Date
The expiration date is your agreement to hold your Novavax options contract until a certain date. Novavax has weekly options and options that you can hold onto for months into the future. The value of any out-of-the-money option will be 0 at the end of its expiration date because options lose their value gradually over time.
Decide How Many Contracts
As stated before, each Novavax contract represents 100 shares of the stock. You can control multiples of 100 shares by purchasing multiple contracts, for example, 2 contracts control 200 shares; 5 contracts control 500 shares.
Watch Stock Price
All brokers will have stock tickers that follow the price of Novavax. If you plan on trading stocks or options in the short term, be sure that you have live quotes. By default, brokers provide you with quotes that are 15 minutes late until you certify your professional accreditation. Nonprofessional traders can get live, up-to-the-second quotes for free.
Because Novavax is in an industry that moves quickly, stocks under $20 can quickly move to $30 or even $40 overnight. You should take the time to put live quotes on your account to get an edge on the market
Novavax Stock History
In the volatile history of Novavax, it has been in penny stock territory (one of the many stocks under $5) and as expensive as $286 per share. The company was founded in 1987 in Gaithersburg, Maryland. It went public in 2014 and was the recipient of an $89 million grant from the Bill and Melinda Gates Foundation in 2015 to develop a human respiratory syncytial virus vaccine.
Famously, it was one of the first companies to offer a viable testing phase for a coronavirus vaccine, but the FDA also recently gave Novavax fast-track status for its NanoFlu vaccine against the traditional influenza condition.
Pros to Buying Novavax Stock
- Possibility of quick profits: Like many biotech stocks, Novavax moves quickly to the upside on news of a successful drug trial or bringing a new product to market.
- Established entity: Novavax has been a public presence in biotech since 2014. It has been through many bull and bear markets, so investors can be fairly sure the company will stay in business regardless of the health of the industry.
- Support from the medical community: Alongside the Bill and Melinda Gates Foundation, Novavax has also received $384 million for NVX-CoV2373 from the Coalition for Epidemic Preparedness Innovations.
Cons to Buying Novavax Stock
- Volatility: Because biotech moves quickly on news, Novavax is often one of the biggest premarket movers. Big movements can head-fake investors into positions that quickly become unprofitable.
- Potentially long downswings: Biotech stocks like Novavax may go months or even years without releasing a new product or announcing a successful trial. This can cause the stock to lose momentum that may not recover until the next announcement.
Navigating the Biotech Industry Through Novavax Stock
If you were lucky enough to grab Novavax when it was one of the promising stocks under $10 in biotech, you have a lot of cushion to your downside. Investors who are just learning about the industry must be more careful about their entry points. However, Novavax has proven itself as a company that will always be in the running for profitable movement. If you can stomach the volatility and you are willing to do the appropriate research, Novavax may be a good play for you to consider.