One investor apparently thinks that ITT Educational Services
will keep on running.
optionMONSTER's Heat Seeker tracking system detected the purchase
of 5,250 April 80 calls in a single print for $3.70. At the same
time, 2,405 April 70 calls were sold for $8, but volume was below
open interest in that strike.
This suggests that a trader had made money by owning the April 70s
and rolled the position to the higher strike. What's unusual about
the transaction is that he or she more than doubled the number of
contracts owned. As a result, instead of collecting a credit, the
trader paid a debit of about $92,000.
The implication is that this trader is very bullish on the
for-profit college operator, as the increased number of calls
provides much more leverage to a big rally. But the trader also
shifted to out-of-the-money calls, which means that if the stock
doesn't move in the right direction, the entire position will
rose 2.5 percent to $75.51 yesterday and is up 33 percent so far
this year. The stock has been rebounding along with other education
companies following a major selloff in 2010 and 2011. Its last
three earnings reports have beaten expectations, though weak
enrollment briefly hurt the stock in January. (See
Overall option volume was more than twice the average amount
yesterday, with calls outnumbering puts by nearly 7 to 1.
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