A $1.56M Options Bet Against Himax Technologies Stock

An options trader just placed a $1.56 million bearish bet on semiconductor stock Himax Technologies

Josh Selway
Mar 30, 2017 at 2:30 PM
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Call buying has been popular on fabless semiconductor stock Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) for some time. For instance, more than 10 call options have been bought to open for every put during the past 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Narrowing it down to the past 10 days, the nine largest increases in HIMX open interest all belong to calls, with the April 9.50 strike taking the top spot during this time frame. However, with HIMX stock down 6.8% today at $8.65, one options trader placed a substantial bearish bet. 

$12 Level in Focus for HIMX Stock

Indeed, call volume has the advantage on an absolute basis today, but put volume is running at eight times the expected intraday pace. It appears one trader sold to open 5,000 September 12 calls for 30 cents each to help fund his purchase of 5,000 September 12 puts for $3.42 each. Such a trade would leave the speculator with a net debit of $3.12 per spread, or $1.56 million total (100 shares per contract x number of spreads x debit per spread). With breakeven for the transaction coming in at $8.88 (strike minus net debit), this options trader is obviously confident HIMX stock will struggle in the coming months.

Himax Stock Cools After Entering Overbought Territory

The $12 mark does not appear to be a random level, either. For instance, HIMX shares topped out right at the $12 mark back in March 2016 -- representing their annual high. What's more, the stock closed 2016 right near $6, so the $12 level also represents a 100% year-to-date advance. 

HIMX stock is pulling back for a second straight day -- breaking a stretch of outsized gains. For instance, HIMX stock traded as low as $4.88 back in mid-February, and the subsequent surge has left the shares in overbought territory, according to their 14-day Relative Strength Index (RSI) of 77.5. Today's drop puts the equity on pace for just its second close beneath its 10-day moving average since Feb. 10, when the shares were in three-year-low territory. 


himx stock chart today


Good Time to Buy HIMX Options

It is also an opportune time to target near-term options contracts on Himax Technologies, Inc. (ADR) (NASDAQ:HIMX). For instance, the stock has a Schaeffer's Volatility Index (SVI) of 48%, which is just 9 percentage points from a 12-month low. This means unusually low volatility expectations are currently priced into options that expire within three months. 

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