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August 10, 2012  Fri 11:58 AM CT

AMRN: SEE CHART GET CHAIN FIND STRATEGIES
Amarin fell hard late last month, and one holder is throwing in the towel.

optionMONSTER's monitoring systems detected the purchase of 5,600 August 15 calls for $0.35 and the sale of an equal number of September 13 calls for $2.15. Volume was below open interest in the 15s but not the 13s, which indicates that an existing position was rolled from one contract to the other.

The investor probably owns shares in the Irish drug developer and had previously sold the August options as part of a covered call strategy. Today's activity is unusual because he or she apparently rolled to the lower strike, effectively reducing their exit price by $2. The trader collected a credit of only $1.80 in the process, so they're literally paying money to unwind the position. (See our Education section)

AMRN is up 0.5 percent to $12.98 in afternoon trading. Shares peaked at $15.96 last month but then plunged on reports that senior executives were selling. The stock attempted to rebound yesterday but ran into its 50-day moving average, which could be leading some chart watchers to believe that resistance is in place.

That short-call roll accounted for more than one-third of the total option volume in AMRN so far today.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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