I bought HIMX April 8 calls today.
HIMX has been an interesting stock to watch for the last few weeks. After bottoming below $5, the stock has rallied aggressively into the $7s and is breaking out of its recent range this morning.
Let’s look at the details from the normal charts. Starting with the daily chart:
Chart from FreeStockCharts.com
We had a nice run to get off the bottom with momentum. Then, we consolidated for about 2 weeks in a range between 6.73 and 7.55 (with most of the action between 6.90 and 7.25). Today, HIMX is presenting at the Nomura Asia Tech Toru in Taipei. I imagine that was the catalyst for some of the buying, but frankly, I don’t know for sure. My key here is to know that everyone that sold in the last couple of months is losing money and we look like we should push to the 200 Day Moving Average and perhaps to the ~$9.20 range that we struggled to break through after the last gap down almost 6 months ago.
Looking at the hourly chart, we can see the breakout this morning a bit more clearly:
Chart from FreeStockCharts.com
I’m seeing some good action here but there’s no way I want to get involved unless I can get leverage for cheap. We could buy the equity with a stop at the prior high ($7.55) to get good defined risk, but there’s no leverage and we might get stopped out before the next run. To be clear, this is not always a bad thing, but only if we get back in on the next technical signal, which is not always easy. If the options are cheap, we can get defined risk in case this breakout fails and we can get leverage if we run toward $9+.
Now I’ll look into the options markets to see if we can get that leverage:
Chart from LiveVol
This is clear and interesting to me. The realized volatility has been high recently as the stock picks up momentum and the Implied Volatilty is at lows. So now, it’s just about doing some math.
I want some time in case we get a 1-to-2 week consolidation after this move like we did 2 weeks ago. I need to look at April calls here. The April $8 calls for 30-35 cents are interesting for this play. On a move to the prior high of $9.20, they would be worth $1.20+. So, I’d be looking at a 3- or 4-to-1 R&R with a decent probability of getting short covering. Remember that if the rally happens sooner, the premium will pick up sooner, so either the value would be above $1.20 on a full move or we could take money on a move to ~$8.90 if we wish. Either way, I really like the momentum here to repeat some of what we saw in mid-February and look for that move into the $9s, and so I’ll play for this move with April $8 calls.
All Services and Content Are Provided for Educational and Information Purposes Only and Are Not Intended as Legal or Financial Advice.
The information and content provided in or through these Services is for educational and informational purposes only. By accessing and/or using the Services you acknowledge that the Services are not intended to be a substitute for legal, investment, or financial advice that can be provided by an attorney, accountant, and/or financial advisor. You further acknowledge that you should not rely solely on the Services in making any investment or financial decision, and should always check with your financial advisor and tax advisor to determine the suitability of any investment.
All information provided in or through these Services is strictly informational and is not to be construed as advocating, promoting or advertising registered or unregistered investments of any kind whatsoever. The information is provided “as-is” and is not guaranteed to be correct, complete, or current. Trade Academy does not guarantee that you will attain a particular result, outcome, or earnings, and you accept and understand that each individual’s results will vary and depend on numerous factors.
Trade Academy is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission (“SEC”) or the Financial Industry Regulatory Authority (“FINRA”). Further, owners, employees, agents or representatives of Trade Academy are not acting as investment advisors and might not be registered with the SEC or FINRA.