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OmniVision Technologies Targeted by Front-Month Call Buyers

July 15 calls are a popular choice on downtrending OVTI shares

by 7/2/2012 10:51 AM
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Call traders took a shine to OmniVision Technologies, Inc. (NASDAQ:OVTI - 13.24) last Friday, as approximately 11,000 of these bullishly oriented options changed hands during the course of the session. This swarm of activity represented 1.62 times the equity's average daily call volume. Meanwhile, only 121 puts crossed the tape on OVTI -- just 4% of the norm.

The day's most active strike by a wide margin was OVTI's July 15 call, which saw 7,081 contracts exchanged. About 91% of these calls traded at the ask price, indicating they were purchased, and open interest at this strike jumped over the weekend by 1,390 contracts. Now, the July 15 strike carries peak front-month call open interest of 13,737 contracts. Based on this data, it seems safe to say that speculators were buying to open new calls on OVTI last Friday.

In fact, call activity on OVTI is hitting annual-high levels lately. During the past 10 sessions, the stock has racked up a call/put volume ratio of 18.69 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio arrives in the 99th percentile of its annual range, as traders have purchased calls over puts at a faster clip just 1% of the time over the past year.

OVTI daily price chartLikewise, the Schaeffer's put/call open interest ratio (SOIR) for OVTI stands at 0.46, with calls more than doubling puts among options set to expire within three months. This slim ratio marks a new 52-week low for the SOIR, echoing the apparently bullish bias evidenced by the stock's recent buy-to-open option volume.

However, it's worth noting that short interest accounts for a robust 18.6% of the stock's float, raising the notion that calls might be gaining popularity as hedging vehicles -- rather than as straightforward bullish bets.

On the charts, OVTI has shed 61.7% of its value over the past 12 months. The stock is down 0.8% today, and remains pinned beneath short-term pressure at its declining 10-day and 20-day moving averages. Going forward, that glut of call open interest at the out-of-the-money July 15 strike could create an additional layer of options-related resistance.


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