Options Trading News

June 19, 2013  Wed 11:13 AM CT

New Oriental Education is hovering after a big run, and traders don't expect much of a pullback.

optionMONSTER's market scanners detected the sale of 2,439 January 18 puts for $1.20 and $1.25 today. Volume was almost 9 times the previous open interest at the strike, indicating that a new position was initiated.

If the Chinese education stock remains above $18 through early next year, the contracts will expire worthless and the put seller will keep the credit as profit. The trader will be on the hook to buy the stock for $18 if it goes below that level. (See our Education section for more on short puts.)

EDU is down 0.91 percent to $21.78 in midday trading but is up 26 percent in the last three months. The shares also peaked around $20 between late November and early January, which could make some chart watchers think that level will become support. That would also favor selling puts at the $18 line.

Total option volume is almost triple the daily average so far today.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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