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Is Himax heading for new highs?

By: optionMONSTER
Posted: 2/21/2014 5:14:00 AM
Referenced Stocks: HIMX

One big investor is looking for another leg higher in Himax Technologies, which has already more than quadrupled in the last year.

optionMONSTER's Heat Seeker tracking program detected the purchase of 2,000 January 15 calls for $2.84 and the sale of an equal number of January 25 calls for $0.94 yesterday. Volume was below open interest in the 15s, so there are two possible explanations for the activity.

The more likely one is that both halves of the trade were new opening positions, in which case this is a bullish vertical spread with the potential to earn 426 percent if the stock closes at $25 or higher upon expiration 11 months from now.

Alternatively, the trader may own shares in the maker of liquid-crystal displays and had sold the January 15s as part of a covered-call strategy . If that's the case, he or she rolled those calls up to the 25 strike, getting the right to collect an additional $10 on the stock.

Either way, the trader paid $1.90 and is looking for a move above $15. (See our Education section)

HIMX rose 3.9 percent to $13.85 yesterday and has spent the last two months consolidating in its current range. The shares have now returned to their 50-day moving average, which could make some chart watchers expect more gains.

Our researchLAB momentum scanners repeatedly flagged the stock early last year, but it became more widely known after Google bought a 6.3 percent stake in the company in July.

Total option volume in Himax yesterday was twice its daily average for the last month, according to the Heat Seeker. Overall calls outnumbered puts by a bullish 3-to-1 ratio.