How one trader is enrolled in Corinthian

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A large investor wants to lock in gains as Corinthian Colleges fights its way back from the dead.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 7,000 November 2 calls for $0.77 and the sale of an equal number of November 1 calls for $1.70. Volume was below open interest in the 1s but not the 2s, which indicates that an existing long position was rolled from one contract to the other.

The trader apparently made money in the lower-strike calls and is adjusting the position to lock in those profits or recoup the initial investment. He or she collected $0.93 and can still profit from further gains in the beaten-down education stock if it continues to rebound. (See our Education section)

COCO fell 5.42 percent to $2.62 yesterday. It lost more than half its value between February and early August but has appreciated 30 percent since then. Like most others in the industry, the company has struggled for the last two years as government authorities have cracked down on student loans, once the lion's share of their revenues.

Corinthian, which previously traded in the mid-teens, now fetches less than half of book value. In addition, short interest represents more than a quarter of its float, which could be leading investors to anticipate a rebound over time.

Overall option volume in COCO was 86 times greater than its daily average yesterday, according to the Heat Seeker. Calls outnumbered puts by more than 500 to 1.

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.

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

This article appears in: Investing , Options

Referenced Stocks: COCO



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