Bull bets on Education Management
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 revenue.
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 expiration.
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)