MagnaChip Semiconductor Corporation (MX) Options Hot as Stock Tanks

Magnachip Semiconductor Corp (MX) has erased nearly half its value this morning

by Andrea Kramer

Published on Feb 13, 2015 at 10:46 AM
Updated on Apr 20, 2015 at 5:09 PM

Magnachip Semiconductor Corp (NYSE:MX) has surrendered almost half its value to trade at $7.66, and earlier touched a three-year low of $6.40, after the Korea-based firm filed restated results for fiscal years 2011-2013. The stock has been relegated to the short-sale restricted list, yet it looks like option players are rolling the dice on a short-term recovery.

Overall option volume is running at 23 times the average mid-morning pace, yet calls have outnumbered puts by a margin of about 2-to-1. Most of the action has transpired at the February 7.50 call, where buyers are gambling on MX to move north of $7.50 through the close next Friday, when front-month options expire. Specifically, the buyers will make money if MX climbs atop $7.93 (strike plus volume-weighted average price of $0.43).

In light of MX's massive slump, delta on the call -- which was deep in the money as of yesterday's close -- fell to 0.61 from 0.97 last night. In other words, the contracts now sport about a 61% chance of expiring in the money.

Leading up to Magnachip Semiconductor Corp's (NYSE:MX) restated results, short-term option players were paying up to bet on MX, and most were aiming bullishly. The equity's Schaeffer's Volatility Index (SVI) of 137% sits 3 percentage points from an annual peak, reflecting historically pricey near-term premiums, and the stock's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 3.28.


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