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Why calls are taking off in Apollo

Calls are active on education company Apollo Group as shares briefly hit their highest level in months.

APOL is trading at $38.49, up 1.42 percent on the day. The for-profit education company has climbed as high as $39.58 early in the session, which was the highest level for shares since they gapped down from $50 to $38 on the November earnings announcement.

Option volume is about 5 times APOL's average, led by action at the January 40 call strike. One block of 10,000 traded for $2.08 against open interest of 5,480 contracts. At the exact same time, 5,000 January 36 calls went for $4.48, at less than open interest at that strike.

Given how far those 36 calls are in the money, this could be a roll or a bullish call position from in-the-money to out-of-the-money contracts while doubling the position for higher exposure. It is also possible that this is a ratio spread, which would take its greatest profit if APOL is around that $40 level come expiration. (See our Education section)

(Chart courtesy of tradeMONSTER)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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