Westport Innovations draws bulls


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The bullish paper continues to build in Westport Innovations.

optionMONSTER's Heat Seeker monitoring system detected unusual buying in the January 19 calls for $0.30 on Thursday. The maker of parts for natural-gas engines climbed the next two sessions, leading those calls to more than quadruple to as much as $1.28 by yesterday morning.

And the bullish trades continued. This time, 4,500 April 17 puts were sold against open interest of just 912 contracts. The largest block fetched $1.10, which the investor will keep as profit if the shares close over $17 on expiration. That's slightly below its 2-1/2 year low last week.

Investors sell puts when they like a stock but don't want to shell out cash getting long. The strategy lets them make money from the passage of time , even if shares fall slightly. Yesterday's trade was also noteworthy because implied volatility has been climbing in the name, which increases the value of those contracts sold short. (See our Education section)

WPRT ended the session up 6.2 percent to $19.52 but lost roughly half its value between early July and mid-December. While its business has grown rapidly, earnings have consistently missed expectations. Short interest also represents 20 percent of the float, which could fuel a rally.

Total option volume in Westport yesterday was triple its daily average for the last month.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing , Options

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