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It's rare to see Himax Technologies, Inc. (ADR) (HIMX) puts take precedence
Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) was last seen 7.6% lower at $7.38 -- bucking the broad-market trend higher -- prompting a wave of bearish betting in the stock's options pits. Specifically, puts are crossing at a rate five times what's normally seen at this point in the day. The most popular contract is the now in-the-money March 7.50 put, which has seen over three times as much action as the next closest contract.
On a closer look, it appears traders are buying to open the options in hopes of HIMX falling further below $7.50. The volume-weighted average price (VWAP) for the options is $0.22, meaning the shares need to reach $7.28 (strike minus VWAP) by the close on Friday -- when front-month options expire -- for the speculators to profit. The security's intraday low sits at $7.31.
To say call buying has dominated HIMX's options pits lately would be an understatement. In fact, over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have purchased over 106 calls for every put. The resulting 106.36 call/put volume ratio is higher than 98% of all similar readings from the past year, pointing to an increased appetite for bullish bets.
However, short interest more than doubled during the past two reporting periods. As such, the recent affinity for long calls could be attributable to HIMX shorts looking for an options hedge.
Changing gears, most analysts are bearish on the stock. Five brokerage firms have handed out "hold" or worse ratings, with three others calling the stock a "strong buy." Just today, analysts at Northland Capital reiterated an "outperform" rating, but said the stock is off to weak start this year.
On a long-term basis, Himax Technologies, Inc. (NASDAQ:HIMX) has been an underperformer on the charts. Year-over-year, the equity has surrendered over half of its value.