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Neptune investor rides rough waves

David Russell (david.russell@optionmonster.com)

Traders keep selling the upside in Neptune Technologies & Bioresources.

On July 5 , optionMONSTER's scanners detected heavy volume in the November 5 calls as investors bet that the health-supplement company would stay below its recent highs. A similar trade occurred yesterday, but it involved a roll from one strike to another.

Our tracking systems detected the purchase of 12,500 August 2.50 calls for $1.40 and the sale of more than 16,00 August 4 calls for $0.20 yesterday. volume was below open interest at the 2.50s, which suggests that an existing position was adjusted.

The investor probably owns NEPT shares and sold the 2.50s as part of a covered-call strategy . Now that the stock has rallied, he or she closed that trade and sold more contracts at 4 line. The trader paid more than $1 to make the change but will no longer be forced to unload shares for $2.50 at expiration in 4-1/2 weeks. (See our Education section for more on how to manage trades effectively with options.)

NEPT rose 2.22 percent to $3.69 yesterday. The company has a patented method of extracting omega-3 oil from ocean crustaceans, which is then used in nutritional supplements. It fell in November after a factory explosion but has been slowly recovering since.

Total option volume was 10 times greater than average in the session.

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