Calls bet MagnaChip will rebound
Traders has lost more than half its market value in the last three months, but traders are positioning for a rally in MagnaChip Semiconductor by the end of summer.
About 3,500 September 7.50 calls were purchased for $0.65 to $0.75 yesterday, according to optionMONSTER's Heat Seeker tracking program. This represents fresh buying, as open interest in the strike was just 828 contracts before the session began.
These long calls lock in the price where the stock can be purchased through mid-September no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $7.50. (See our Education section)
MX rose 6.41 percent to $6.14 yesterday. The semiconductor maker gapped down from $15 after restating financial results on Feb. 12 and then fell into a tight range, but shares have begun to show some life this week.
Yesterday's total option volume in the name was 32 times its daily average for the last month. Only 4 puts changed hands, a reflection of the session's bullish sentiment.
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