One big investor likes Apollo Group before its earnings report
optionMONSTER's Heat Seeker tracking system detected the purchase
of 5,000 May 60 calls for $2.45 and the sale of an equal number of
May 40 puts for $1.31. Volume was more than 13 times open interest
in both strikes.
The trade cost $1.14 and is similar to buying shares in the
for-profit operator of colleges because it will profit from a rally
and lose money from a decline. The main difference, however, is
that it will track the underlying shares less closely as
, becoming worthless if APOL remains between $40 and $60 on
expiration. (See our
The stock fell 1.37 percent to $53.13 yesterday and is up 38
percent in the last three months. It's been trending higher since
late 2010 after a government crackdown on student loans squeezed
the entire industry earlier that year.
APOL is now back to roughly the same level that served as
resistance in September 2010 and again last July. Yesterday's
bullish combination strategy suggests one big investor is looking
for a breakout. There was also heavy buying in the January 55 calls
for $1.66, but volume was below open interest.
The trading followed bullish activity in the name on
and bearish put buying on
More than 22,000 options contracts traded overall in the name
yesterday. That's almost 14 times average, according to the Heat
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