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INVN pricing ?4

13:50 13-Feb-17


INVN shares have remained stubbornly below the $12.75-12.90 levels achieved before the proxy scare.  The Hart-Scott-Rodino period is expiring and some may have been looking for that to trigger some change.  However, I had a look at the related options, where the open interest indicates to me that current pricing will probably persist for about another month, leading up to the March monthly expiration:

INVN Options Open Interest
June Calls
 March Calls
 Feb Calls
Strike
Price		 Feb Puts
 March Puts
 June Puts

58
6.00
 20
25
5
 247
7.00

58
174
 1,216
8.00

309
159
 1,286 1
 9.00
405 210
97
 744
10.00 40
 28 3,153
322
 903 41
 11.00 10
 169 75



11.50
 80

263
 1,470 73
 12.00 169
 2,303 6,158


76
 12.50


3,127
 851 684
 13.00
123 27
56
 306
14.00
0

In most cases there is no open interest on the weeklies expiring in between the monthly expirations, and where there is it is negligible.  Note that the open interest even on the March and June monthlies is NOT huge.  Nonetheless, the inference that I make is that mid-March is when the deal spread (which currently represents about 16% annualized profit) will begin to narrow.  Outlooks like this are always subject to change, but the latest evidence supporting my expectation that the deal will go ahead as planned is the JV launched by Qualcomm and TDK.  16% is far from the best return on capital I've ever seen, but for those who are worried about the broader market and have thus been accumulating cash, it may represent an acceptable middle ground with regard to risk.