Call selling in New Oriental Education
Call selling sees limited upside in New Oriental Education & Technology.
The Chinese educational services provider is down fractionally to $27.35 in midday trading. Shares remain in the middle of their range for the last six weeks and a 52-week range that was carved out in September when the stock fell from above $34 to below $21.
EDU's option volume tops 7,700 contracts so far today, already more than 11 times the daily average. Almost all of that turnover is in one strike.
A large block of 7,327 May 30 calls was sold for $0.25, according to optionMONSTER's systems. The previous open interest in the strike had been just 67 contracts, so this is a new position.
The call selling represents a bet that EDU won't trade above $30 by the May expiration. The options could have been sold naked, which would have an initial bearish bias, or they could have been part of a covered call strategy. The latter would be bullish up to the strike price but would give up any gains in the stock beyond that. (See our Education section)
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