A large trader apparently thinks that Corinthian Colleges has
gone from interesting to boring.
The for-profit education stock has roughly tripled since early
October, with much of that move following a strong earnings report
at the beginning of this month. It's been stalling more recently,
and a giant option trade yesterday is looking for that sideways
move to continue.
optionMONSTER's systems show that some 25,000 May 4 puts were sold
for $0.285 and that an equal number of May 6 calls were sold for
$0.29. Volume was more than 17 times open interest at each strike.
The strategy resulted in a credit of $0.575, which the investor
will keep if COCO remains between $4 and $6 on expiration. Gains
will erode outside that range, turning to losses below $3.425 and
Known as a
, the transaction is an example of a
trade that makes money from the
passage of time
rather than a directional move. (See our
COCO rose 2.09 percent to $4.88 on Wednesday. It peaked around $6
early last year and had support around $4 in July before collapsing
along with the rest of the market. Some chart watchers may expect
those technical levels to constrain the stock's movement and
support the case for the short strangle.
Overall options volume was 18 times greater than average in
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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