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Neurocrine draws nervous position

David Russell (david.russell@optionmonster.com)

Neurocrine Biosciences has rallied back to resistance, but one investor is worried about a pullback.

optionMONSTER's Depth Charge monitoring program detected the purchase of 2,000 August 9 puts for $1.05 and the sale of an equal number of August 15 calls for $0.90. Volume was more than triple open interest at each strike, showing that this is new positioning.

The trader probably owns shares in the drug developer and is using the options as a hedge. The investor paid $0.15 to implement this protective collar position and has now locked in a minimum selling price of $9 and a maximum selling price of $15. Those levels would be $8.85 and $14.85, respectively, including the cost.

NBIX fell 1.42 percent to $11.78 yesterday but is up 57 percent so far this year. It's been sitting around the same price area where it peaked in late 2007, shortly before it gapped violently lower. That could be leading some chart watchers to expect sellers to step in.

Total option volume was 10 times greater than average in the session, according to the Depth Charge.

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