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Bears want to slam Corrections Corp.

David Russell (david.russell@optionmonster.com)

Corrections Corporation of America is back to resistance, and the bears want to hammer the stock.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 3,000 August 30 puts for $1.15. There was no previous open interest in the strike before the trade occurred, indicating that new positions were initiated.

CXW fell 2.28 percent to $30.37 and is back near the same level where it has peaked several times since late 2008. The thinly traded prison operator is highly dependent on the budgetary politics of California and gapped lower in April after state lawmakers voted to reduce the population behind bars.

Second-quarter earnings are scheduled for after the bell on Aug. 9, and yesterday's trader is apparently looking for a decline into the release or immediately after.

If shares hold their ground, the puts will probably lose most of their value. But if they tank, the puts could easily double or triple. (See our Education section for more on how options can be used to generate leverage.)

Almost 3,300 contracts traded overall in the name, compared with fewer than 700 in an average session. Puts outnumbered calls by a bearish 74-to-1 ratio, according to the Depth Charge.

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