Analyst: This Tech Stock Could Surge 50%

IMMR call options are trading at 19 times the typical pace

Sep 12, 2018 at 1:49 PM
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Shares of touch technology provider Immersion Corporation (NASDAQ:IMMR) are higher today -- sitting out a sector swoon -- thanks to some upbeat analyst attention. Specifically, Craig-Hallum upgraded IMMR stock to "buy" from "hold," and lifted its price target from $14 to $15 -- a premium of almost 50% to yesterday's close of $10.20. The brokerage firm attributed the bullish attention to Immersion's new interim CEO, waxing optimistic on a deal with Samsung sooner rather than later.

IMMR stock was last seen 7.6% higher at $10.98. However, the shares have struggled to rally north of the $12 region, which has capped rebound attempts since a post-earnings bear gap in early August. This region is also roughly double IMMR's November low of $5.76, and represents a 50% Fibonacci retracement of the stock's rally from those lows to its June 13 10-year high of $17.70.

IMMR stock chart

While absolute options volume remains light, Immersion calls are crossing the tape at 19 times the average intraday pace today, with more than 900 exchanged. That's compared to just over 100 IMMR puts traded so far. It appears speculators expect the shares to barrel past aforementioned resistance in the next few months, buying to open the November 12.50 call -- the most active option so far today, with more than 500 contracts exchanged.

Today's appetite for short-term calls runs counter to the stock's Schaeffer's put/call open interest ratio (SOIR) of 4.62, which indicates that put open interest nearly quintuples call open interest among options expiring within three months. This ratio stands in the 94th percentile of its annual range, suggesting short-term traders are more put-heavy than usual at the moment.

Meanwhile, there's plenty of room left on Immersion's bullish bandwagon. Just three brokerage firms follow the stock, and two maintain tepid "hold" recommendations. Likewise, short interest grew 22.5% in the most recent reporting period.


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