New Oriental Education and Technology Group (EDU), which tumbled 34.4 percent yesterday after the company released earnings and disclosed an SEC investigation, is down aother 84 cents to $13.78 on heavy volume of 12 million shares today after Jefferies downgraded to the stock to hold fom buy. The firm lowered its price target by 45 percent to $18 due to the regulatory overhang. Options on the Chinese foreign language training company are busy for a second day. 7,525 calls and 20,000 puts so far. The top trade is a 714-lot of Jul 17 calls at 30 cents when the market was 30 to 35 cents and looks like an opening call writer — probably betting that the stock will hold below $17 through the end of the week. A 590-lot of July 17.5 calls traded for a dime when the market was 10 to 15 cents. July 13 puts are the most actives and have traded in small lots. 4,490 total. 4,370 July 14 puts have also changed hands. While the flow seems to include a mix of trading, buying and selling, opening and closing, 30-day at-the-money implied volatility is up another 25 percent and has now jumped 92 percent on the week, to 123 from 64 on Friday.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.