Call Volume Peaks on Booming Himax Technologies Stock – Schaeffers Research (blog)

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Fabless semiconductor stock Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) has been red-hot since the company announced it’ll be making a 3-D camera with Qualcomm (QCOM). Since the close on Aug. 29, the shares have added 26%, including today’s 4.9% pop to trade at $11.00. This has HIMX stock bucking today’s bearish trend for chip stocks, and puts it on pace for its highest close since April 1, 2016. Options traders are jumping in as a result, with HIMX calls trading at 11 times the expected pace. 

Jumping right in, call volume has already hit a 52-week high, with more than 31,000 contracts traded. A significant portion came at the hands of one speculator, who seemingly bought to open a block of 10,000 March 2018 12-strike calls for $1.25 each. This would mean this trader spent almost $1.3 million (number of contracts * premium paid * 100 shares per contract) betting on Himax Technologies shares rising atop $12 by the time the options expire next March. Looking back, the equity peaked at exactly $12 back in March 2016. 

Buy-to-open activity could also be taking place at the March 2018 16-strike call , where roughly 2,500 contracts have traded. These bulls would be wagering on HIMX rising another 45% by next March. The stock’s all-time high stands at $16.15, from March 2014. 

Taking a broader view, Himax Technologies options traders were biased toward calls even before today. Seven of the 10 largest open interest positions belong to calls, including the September 12 strike, where 11,416 contracts reside. Sure enough, data from the major options exchanges confirms some buy-to-open action here. 

Data suggests it’s a good time to target near-term options on the tech stock, too. This is according to its Schaeffer’s Volatility Index (SVI) of 50%, which ranks just 12 percentage points from an annual low — signaling lower-than-usual volatility expectations in the near term. Plus, Himax has a Schaeffer’s Volatility Scorecard (SVS) of 100, showing a strong tendency for the stock to outperform options traders’ volatility expectations. 

And anyone hoping for the stock to go higher will be happy to know that short sellers have been throwing in the towel. In the last reporting period alone, short interest fell by 19.5%, but 12% of HIMX’s float is still controlled by these bears. That means there’s potential for this short-covering trend to continue, hinting at additional tailwinds. 

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