Put sellers call a bottom in Career Education

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Traders are calling a bottom in Career Education as the shares attempt to hold long-term lows.

optionMONSTER's market scanners detected the sale of more than 3,200 September 3 puts in the education stock for $0.40. Volume was more than 24 times previous open interest at the strike.

Writing puts obligates the investor to buy shares at the strike price, while letting him or her collect premium in the meantime. The unusual thing about today's transaction is that they selected an in-the-money strike, which will cause the position to behave similarly to owning the stock on a move up to $3. See our Education Section for more.

CECO declined 3.61 percent to $2.67 in morning trading, and has lost 23 percent of its value in the last month. It's been falling since 2010 after the Obama Administration cracked down on student-lending practices, and has recently been downsizing its operations while seeking growth opportunities overseas.

The company trades for just one-third of book value and has a smaller market capitalization than its cash reserves. It also has no debt, which could make some value investors think it's attractive regardless of its business. Shares have also been trying to form a long-term inverse head and shoulders reversal pattern since late last year.

Total option volume is 16 times greater than average so far in the session.



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: CECO

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