Tuesday, June 1, 2010

Corinthian Colleges (COCO) - Huge Upside Bet Triples Down in Two Days

COCO is trading 13.09 with IV30™ up 8.4%. The LIVEVOL™ Pro Summary is below.

The company has traded nearly 26,000 options on total daily average option volume of just 2,863. The action has been in the Jun and Jul 15 calls (purchases) and the Aug 10 puts (sales). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates a substantial OI (open interest) in all three lines.

A peak at the OI charts for those three lines has certainly got my attention (click either to enlarge).

Note that the opening trades (i.e. Long Jun and Jul 15 calls and short Aug 10 puts) all occured very recently (i.e. Friday) for size. Now the trading today is more than doubling down. In total the trades look like (about):

Jun 15 Calls: Long 18,000
Jul 15 Calls: Long 5,000
Aug 10 Puts: Short 10,000

These are huge positions in a stock that averages 2,800 contracts a day and with just 88,000,000 shares outstanding on a $1.2 billion market cap.

The Skew Tab snap (click to enlarge) illustrates the resulting vols.

I've highlighted the 15 strike in Jun. You can see how it spikes up in vol relative to the strike below (12.5). The Jul 15 line is also elevated.

Finally, the Charts Tab (6 months) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference.

You can see the stock has plummeted of late down to ~$13 from $19 in just six weeks. There was a note put out by Credit Suisse about the restrictive regulatory environment for student loans and the potential for loan payback problems.

This is trade analysis, not a recommendation.

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1 comment:

  1. I'm thinking its some sort of calendar risk reversal with the bears locking in their gains with this smart bet. These education stocks have been getting hammered lately with the Department of Education about to release a draft proposal of new regulations affecting these sorts of companies. Check out APOL and ESI option activity on Friday as well.