$NEPT calls spike higher overnight

It took just one session for bullish option traders to post large gains in Neptune Technologies.

Just yesterday, Investitute’s tracking systems detected the purchase of 7,800 July $3 calls for $0.25 to $0.65 with shares at $3.36. Volume was more than double the strike’s open interest of 3,183 contracts, indicating that this was fresh buying.

Those calls traded for $1.45 this afternoon, more than 5 times their initial purchase price. The stock rose 30.4% at the same time, a huge move but nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

NEPT rocketed 37.77% to $4.45 today. The nutrition-products company rallied this morning after announcing a multi-year deal to provide cannabis with Canopy Growth this morning.