OptionsHouse

Options Trading News

July 5, 2013  Fri 11:52 AM CT

NEPT: SEE CHART GET CHAIN FIND STRATEGIES
A trader apparently believes that any upside will be limited in Neptune Technologies & Bioresources for the next several months.

optionMONSTER systems show that about 10,000 NEPT options have traded, already 4 times its full-session average for the last month. Dominating the volume is one print in the November 5 calls, where a trader sold 9,700 of those calls for the bid price of $0.10 on a wide bid/ask spread. The previous open interest was just 147 before the trade appeared, so this is a new position.

This trade carries the obligation to sell 970,000 shares of NEPT if it rises above $5, while today's today stock volume is just 86,000 shares. The calls could have been sold naked or against an existing long position in a covered-call strategy. Either way, the trader is making the bet that $5 is the likely high by that November expiration. (See our Education section)

NEPT is up 1.7 percent to $3.295 this afternoon. The pharmaceutical company was up $3.40 at the start of the week, its highest level since gapping down in early November. Shares dipped as low as $1.62 at that point but have been climbing since.
Share this article with your friends


OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »