We report the discovery of a flaring X-ray source with an optical counterpart with H \alpha emission and red-excess , in the direction of the SMC .
A 100 ksec X-ray observation with Chandra detected a flare lasting \sim 6 ksec in the source CXO J005428.9-723107 .
The X-ray spectrum during the flare was consistent with a thermal plasma of temperature kT=2.5 \pm 0.4 keV .
In quiescence following the flare the spectrum was softer ( kT \sim 0.4 keV ) .
Timing analysis did not reveal any significant periodicities or QPOs .
Optical images taken with the Magellan-Baade 6.5m telescope show a single star in the ( 0.9 ” ) error circle .
This star has apparent magnitude V=19.17 , exhibits enhanced H \alpha emission ( H \alpha –r = -0.88 \pm 0.02 ) , and has a large proper motion .
Alternative explanations are explored , leading to identification as a relatively nearby ( Galactic ) coronally active star of the BY Draconis class .