Shady Activity in Chinese ADR

Discussion in 'Wall St. News' started by Sbelmont, Dec 14, 2007.

  1. Unusual Options Activity in SIMO

    Options Flow Summary & Unusual Activity Alert: General Sentiment, Dendreon Corp (DNDN) & Silicon Motion Technology Corp (SIMO)

    Posted on 12/14/2007 in Trading & Technology by Henry Schwartz

    Silicon Motion Technology Corp (SIMO)

    ...Shares in this Chinese ADR, which specializes in semiconductors for multimedia devices, have popped 13% today. There was some interesting and unusual options volume on the tape earlier today. This suggests that a fast-money player tapped into the leverage and liquidity of the options market to gain immediate upside exposure in the underlying. It was a trade that quickly paid off.

    From an opening range near $16.90, the stock slowly trended up, approaching $17.50 by 10:15am. Small call buyers were seen nibbling at the 17.5 strikes in Dec and March.
    A large order was crossed on the PHLX at 10:22am, with a customer paying $2.95 for 2,200 March 17.5 calls. The executing broker crossed the entire order. The equivalent delta of this trade is more than 100,000 shares of stock. That represents 20% of the recent volume levels in SIMO and is a significant block to position.

    Upward motion in the stock accelerated throughout the day, touching a high of $19.50 just after noon. That has resulted in paper profits to the call-buyer of nearly $220,000 in just 90 minutes. Those profits are even more impressive when you consider that it was made on just under a $650,000 investment.

    Unfortunately for the buyer, the stock has retreated to $18.90 over the past hour and these calls are currently quoted around $3.60....

    Unusual Options Activity in SIMO