Education Management has been getting slammed along with most
other for-profit college stocks, and one investor is looking for a
optionMONSTER's Heat Seeker tracking system detected the purchase
of 1,500 December 10 calls for $1.30 and the sale of an equal
number of December 15 calls for $0.10, resulting in a net cost of
$1.20. Volume was more than 7 times open interest in both strikes.
EDMC fell 1.42 percent to $9.03 in late morning trading and has
lost 60 percent of its value since mid-March. The education sector
has been plummeting as investors worried that government regulators
would restrict student loans, which finance the bulk of their
However sentiment has been improving in the last week. Corinthian
Colleges saw heavy call buying on Thursday, and Apollo Group got
upgraded by Morgan Stanley this morning.
Today's trade on EDMC, known as a bullish call spread, is designed
to leverage a rebound as well. It will earn a maximum profit of
about 315 percent if the shares close at or above $15 on December
Overall option volume in the stock is 8 times greater than average
so far in the session, and not a single put has yet traded, which
reflects the bullish sentiment.
(Chart courtesy of tradeMONSTER)