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Traders look for quick pop in Apollo

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Short-term traders are looking for a pop in Apollo Group shares by the end of this week.

optionMONSTER's Heat Seeker system found a strong buying pattern in more than 8,400 Weekly 17.50 calls that expire tomorrow, which saw premiums rise from $0.39 to $0.73 yesterday afternoon. These are clearly new positions, as the open interest in the strike was just 101 contracts before the session began.

These long calls lock in a purchase price of $17.50 for the stock no matter how far it might rise, potentially providing upside leverage while risking less capital than buying shares outright. But given that they expire at the end of tomorrow's session, the value of these contracts will deteriorate rapidly if the shares fail to rise right away. (See our Education section)

APOL rose 1.94 percent yesterday to close at $17.89. The stock had spiked up to the $23 level a month ago but immediately began a sharp decline and broke below several key moving averages. Shares then gapped down after the education company's last earnings report on June 25 and have been trading in an increasingly tight range since then.

Total option volume in Apollo was just shy of 13,000 yesterday, double its daily average for the last month. Overall calls outnumbered puts by more than 8 to 1, a reflection of the session's bullish sentiment.

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