Trader Places Big Upside Bet on ITT Educational Services, Inc. (ESI)

One trader bought to open 2,309 June 3 calls on ITT Educational Services, Inc. (NYSE:ESI)

by Alex Eppstein

Published on May 29, 2015 at 11:53 AM
Updated on Jun 24, 2020 at 10:16 AM

ITT Educational Services, Inc. (NYSE:ESI) is having a banner day, soaring 75% to trade at $4.22. Not surprisingly, the stock's options pits are hopping, with total intraday volume running at 23 times what's expected.

One of ESI's most active options is the June 3 call, and Trade-Alert confirms one speculator bought to open a sweep of 2,309 contracts for $0.45 apiece, minutes after the open. In other words, this traders paid a total of just over $100,000 (premium paid * number of contracts * 100 shares per contract), expecting the shares to topple $3.45 (strike plus premium) by June expiration. At the time of the trade, ESI was lingering near $2.56, and with the bid on this strike currently at $1.21, it looks like the early morning buyer has already made a healthy profit.

Shifting gears, short sellers have been keyed in on ESI for some time. Currently, three-fifths of the stock's float is sold short, representing more than six weeks of trading activity, at the average daily volume.

This bearish bias is understandable, given ITT Educational Services, Inc.'s (NYSE:ESI) woeful technical track record -- exacerbated by recent fraud charges. While the shares have surged today -- possibly on the firm's 2014 10-K filing -- they've surrendered 56% year-to-date, and earlier tested resistance at their 40-day moving average.

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