Corrections Corporation of America is back to resistance, and
the bears want to hammer the stock.
optionMONSTER's Depth Charge monitoring system detected the
purchase of more than 3,000 August 30 puts for $1.15. There was
no previous open interest in the strike before the trade
occurred, indicating that new positions were initiated.
CXW fell 2.28 percent to $30.37 and is back near the same level
where it has peaked several times since late 2008. The thinly
traded prison operator is highly dependent on the budgetary
politics of California and gapped lower in April after state
lawmakers voted to reduce the population behind bars.
Second-quarter earnings are scheduled for after the bell on Aug.
9, and yesterday's trader is apparently looking for a decline
into the release or immediately after.
If shares hold their ground, the puts will probably lose most of
their value. But if they tank, the puts could easily double or
triple. (See our
section for more on how options can be used to generate
Almost 3,300 contracts traded overall in the name, compared with
fewer than 700 in an average session. Puts outnumbered calls by a
bearish 74-to-1 ratio, according to the Depth Charge.