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Bears Snatch Up Himax Technologies, Inc. (ADR) (HIMX) Options

Himax Technologies, Inc. (ADR) puts are being bought to open at an extreme rate

by 7/15/2014 2:24 PM
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Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) put buying has hit fever pitch in recent weeks. Specifically, the stock's 10-day put/call volume ratio of 0.71 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the top percentile of its annual range. In other words, traders have been scooping up long puts over calls at an extreme pace recently.

With HIMX shares off 1.8% today to trade at $6.10, put buying is once again all the rage. Specifically, nearly 10,000 puts have changed hands on the tech firm -- 12 times the usual intraday clip. Short-term contracts are popular, as well, per the stock's 30-day at-the-money implied volatility, which is up 5.2% to 72.9%.

Diving deeper, HIMX's most active strike is the August 6 put, which has seen nearly 5,200 contracts traded. Almost all of the puts have been exchanged at the ask price, volume outstrips open interest, and data from Trade-Alert suggests the out-of-the-money contracts are being bought to open -- possibly ahead of a potential mid-August earnings report.

At-expiration breakeven for the back-month contracts is $5.56, or the strike less the volume-weighted average price of $0.44. Additional gains will mount with a move all the way down to zero, while the most the traders have at stake is the initial premium paid, should HIMX be resting above $6 at the close on Friday, Aug. 15, when the puts expire.

Historically, there's good reason to be skeptical of Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), especially heading into an earnings report. The company has failed to top the Street's per-share profit projection in each of its past four appearances, and in the session following HIMX's early May event, the shares lost 13.2%.


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