Time to get LONG IMAX in Front of Earnings

IMAX Corporation (IMAX) is an entertainment company who specializes in theater systems for customers who operate commercial theaters and theaters in museums and science centers. The company’s stock is currently trading around $26.55 in a 52 week range of $23.50-$31.23. The stock has underperformed the market over the past 12 months having only added 5.87% to share prices over that time. Despite this relatively weak performance options action in IMAX in recent weeks has been decidedly bullish. Early in today’s trading session a trader bought 1,215 IMAX Feb 27 calls for $0.90 and sold 1,215 IMAX Mar 23 puts for $0.20. Volume on the Feb 27 call line has now reached 3,200 contracts and will add to open interest of 1,711 on that line. This also adds to the persistent call buying we have seen over the past week.  Although the chart of IMAX is relatively weak we believe that all of this bullish order flow is a signal to get long IMAX.  We will remain long through earnings on the 20th.

Trade: Buying the IMAX Feb 27 Calls for $0.90
Risk: $90 per 1 lot
Reward: Unlimited
Breakeven: $27.90

Andrew Keene

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