Call Buying Heats Up On Himax Technologies, Inc. (ADR) (HIMX)

Himax Technologies, Inc. (ADR) has rallied nearly 6% this afternoon

Digital Content Group
Dec 9, 2014 at 2:39 PM
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Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) has surged 5.9% to trade at $8.29. Meanwhile, option traders have set their sights on calls, which are crossing at nearly triple the usual intraday pace, and more than five times the rate of puts. Short-term strikes are apparently in demand, too, based on HIMX's 30-day at-the-money implied volatility -- up 2.2% to 63%.

Accordingly, the LCD name's most active option is the deep in-the-money December 6 call, where 4,390 contracts are on the tape. The vast majority have traded at the ask price, volume edges out open interest, and Trade-Alert confirms newly bought bullish bets.

As alluded to, these HIMX calls are already in the money. However, for the traders to profit at expiration -- specifically, at the close on Friday, Dec. 19 -- the shares must be sitting above breakeven at $8.19, or the strike plus the volume-weighted average price of $2.19. Gains are theoretically unlimited north of this mark, while the most the speculators can lose is the initial premium paid, should the equity settle below the strike at expiration.

Based on today's rally, the Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) call buyers are already staring at some -- albeit minor -- paper profits. Currently, the December 6 call is being bid at $2.25.

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