OptionMonster's tracking systems detected the purchase of 7,500 Weekly 9 calls expiring on Oct. 24. The volume dwarfed the previous open interest of just 424 contracts, showing that this was fresh buying.
The initial blocks priced for 55 cents but quickly ratcheted higher as the trades hit. In less than an hour, they had appreciated more than 30% to 75 cents.
These long calls lock in the price where investors can buy shares in the semiconductor company. They will increase in value with a rally and carry less risk than stock because only the cost of the options can be lost in a selloff. Their relatively inexpensive price can also result in significant leverage in the event of a rally, which is what happened Tuesday.
Himax ended the session up 5.25% to $9.02. Our scanners also spotted a highly leveraged bullish trade in late July that is now up more than 1,000% from its initial entry.
The stock clearly has the potential for dramatic movement, having skyrocketed from $2 to $16 between late 2012 and March 2014. It then lost more than half its value before rebounding last month.
More than 12,500 calls traded in the name Tuesday vs. fewer than 2,300 puts. Overall option volume was six times greater than average.
Russell has no positions in HIMX.