COCO - Huge Upside Bet Triples Down in Two Days

Discussion in 'Options' started by livevol_ophir, Jun 1, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    COCO is trading 13.09 with IV30&#8482 up 8.4%. The <a href="">LIVEVOL&#8482 Pro Summary</a> is below.

    <img src ="">

    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 (<a href=""> in the article</a>).

    <img src="">

    The Options Tab (<a href=""> in the article</a>) 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 (<a href=""> in the article</a>).

    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 (<a href=""> in the article</a>) 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 (<a href=""> in the article</a>). The top portion is the stock price, the bottom is the vol (IV30&#8482 - red vs HV20&#8482 - blue). The yellow shaded area at the very bottom is the IV30&#8482 vs. the HV20&#8482 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.

    Details, trades, prices, vols, skews, charts here:
  2. jsmith


    I don't understand. :confused:

    So what does this trade analysis tell us?
  3. livevol_ophir

    livevol_ophir ET Sponsor

    A pro trader is getting very long.
  4. 1) Is the stock expected to remain range-bound in the mid-teens? :confused:
    2) Is DeVry gonna make a takeover bid? :eek:
    3) Is COCO the type of "school" that trains people for jobs that don't exist? :confused: :(
  5. livevol_ophir

    livevol_ophir ET Sponsor

    Feels takeover ish, but I don't want to start a frenzy... These are big trades and they're repeats on larger volume than the original. Who knows...
  6. Too big for Devry to take over. They are in the 30-50K tuition for a 10 dollar an hour job scam that permeates this sector. As FAFSA money gets a little more scrutiny, their student population will take a hit. Doesn't mean it's not a buy at this level. People are desperate, so those that are desperate may offset the FAFSA hit. Just don't send your kid there. Community College is a much better route for the young person that isn't interested in a four year program. Same courses at a 1/3 the price.
  7. livevol_ophir

    livevol_ophir ET Sponsor

    Well said...
  8. When was the last time you or anybody bragged about hiring a community college graduate over a 4-year ungraduate? :confused:
  9. livevol_ophir

    livevol_ophir ET Sponsor

    I thought we were comparing cc to professional schools... no? Having said that, a college degree (4 year) nowadays is the bare min for many professions...
  10. NoDoji


    P/E < 9 and a 27% short interest. Looks like a high reward/low risk play to me. Thanks for sharing this info!
    #10     Jun 1, 2010