Apollo Group fell hard yesterday, but at least one large
investor is attempting to bottom-fish the education stock.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of 9,000 November 22 calls for $0.90 and the sale of an equal
number of November 15 puts for $1.02. Volume was more than triple
open interest at each strike, indicating that new positions were
The transaction resulted in a credit of $0.12 and will provide long
exposure to the beaten-down education company. The
will appreciate in value and the
puts sold short
will dwindle if the stock climbs, while the opposite will happen to
APOL fell 10 percent to $17.39 yesterday, gapping lower after
quarterly profit and revenue missed expectations. It's now close to
its 52-week low and a key consolidation area from 1998 and 2000,
which could be leading some chart watchers to believe that it will
Thanks to the option strategy, yesterday's trader will make money
if the shares stage a sharp rebound. He or she has also programmed
a buy order at $15, well below its recent levels.
Alternatively, the investor might have been short APOL stock and
could have used the position to lock in profits. (See out
section for other risk-management practices.)
Total option volume was 18 times greater than average in the
session, according to the Depth Charge.
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