Monday, November 25, 2013

UniPixel (UNXL) - Stock Drops, Volatility Explodes on Federal Subpoenas

UNXL is trading $11.86, down 15.5% with IV30™ exploding up 47.5%. The Symbol Summary is included below.

Provided by Livevol

Uni-Pixel, Inc. (Uni-Pixel) is a production-stage company delivering its Performance Engineered Film (PEF) to the display, touch screen and flexible electronics markets. The Company has developed thin film high volume roll to roll or continuous flow manufacturing process. The Company sells its films as sub-components for use in liquid crystal display (LCD) as a back light film and active film sub-component.

So this is obviously both a stock and volatility note.  Let's jump into the news, then the analysis.

WASHINGTON (AP) -- Shares of Uni-Pixel plunged in after-hours trading Friday after the electronic film company disclosed that federal financial regulators had issued subpoenas related to its InTouch Sensors technology.

Uni-Pixel said in a regulatory filing Friday that on Nov. 19, it learned that the Fort Worth, Texas office of the Securities and Exchange Commission was probing agreements related to the touch-screen technology. The company said it "intends to cooperate fully with the SEC regarding this non-public, fact-finding inquiry."

The Woodlands, Texas-based Uni-Pixel makes films for touch screens, electronics and other products.
Its stock had struck a 7-year high in April after the company announced a manufacturing and supply deal with Eastman Kodak Co. The deal called for the companies to open a new manufacturing plant within Kodak's corporate campus in Rochester, N.Y. , to make touch-screen sensors.

Source: AP via Yahoo! Finance; Uni-Pixel shares slide on notice of SEC subpoena.

The reaction is in part so abrupt because of the stock rise and the flurry of interest in UNXL based on the touchscreen technology. Let's turn to the Charts Tab (two-years) below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

Provided by Livevol

On the stock side we can see a remarkable story.

1. From Nov 2011 to Oct 2012, the stock was essentially unchanged.
2. From Oct 2012 to Apr 2013, the stock rose from $6 to a high of over $41.  yeah, almost a 7-fold move.
3. From Apr 2013 to the present, the stock has dropped from $41 to now below $12.

Let's just say that market sentiment has turned a bit sour for UNXL valuation.  And by sour I mean, spit out of your mouth and cover it with dirt.  Oddly, if we just look at the two-year change, we do see a stock price up 100%.

Let's turn to the isolated IV30™ chart over one-year, below.

Provided by Livevol

What I note most remarkably is that UNXL implied volatility was at an annual low just a few days ago (see that low level reached on the far right hand side of the chart).  The news today has exploded the volatility imploded the stock, meaning both that it was a surprise (see stock) and that the news has added risk to the firm's future outlook (the rise in vol).

Finally, let's turn to the Options Tab, below.

Provided by Livevol

We can see Dec vol is priced to 111.29% up 36.6 volatility points while Jan'14 vol is priced to 101.51% up 22.1 volatility points.  I do note that UNXL's IV30™ high this year was 165.42%, so yeah, the vol can go higher...

This is trade analysis, not a recommendation.

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