Some traders think the bearish momentum is finally ready to
shift in Apollo Group.
The for-profit education stock has lost more than two-thirds of
its value since the beginning of last year, but has been trying
to work its way higher since early March. It leapt on Monday in
the wake of a strong earnings report before pulling back
yesterday and today.
Today the options activity is turning bullish. Our Heat Seeker
trade scanner shows unusual activity in the May 20 call, with
almost 5,800 contracts purchased against open interest of 3,370.
Almost all the large blocks priced for $0.34.
Those calls lock in the price where investors can buy shares,
which will result in some big leverage on a percentage basis if
the stock goes higher. For instance, a 25 percent move to $21.45
would result in a profit of more than 300 percent. The benefit of
the strategy is that it provides upside exposure cheaply,
limiting the amount of money that can be lost if the stock
doesn't rise. (See our
APOL is down 3.15 percent to $17.20 in afternoon trading. Its
recent low around $16 was its cheapest price since early 2000.
Total option volume is quadruple the daily average so far today,
according to Heat Seeker.
Calls outnumber puts by a bullish 6-to-1 ratio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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