5 Cheap Option Trades on Education Stocks
by Jon Ogg | August 20, 2010 3:37 pm
5 Options Trading Picks Under $1
#1 – Apollo (APOL)
| Apollo Group Inc. (NASDAQ: APOL[2]) specializes in working adults at the University of Phoenix, College for Financial Planning and others in fields such as sciences, business and management, health care, technology, nursing and more. Apollo was one of the companies that passed the test even though it has had accounting issues and SEC issues in the past. Shares rallied on Monday after it disclosed that its University of Phoenix unit has been asked by its accrediting agency to show evidence that it complies with standards. The company rallied because it believes it is fully compliant. APOL closed today at $40.72, and it has lost more than one-third of its value versus a 52-week range of $38.39 to $76.86.
The APOL Sept 47 Calls can be purchased for 52 cents and offer some of the best upside to a big upside move if the government’s foot gets off its neck. |
 The Secret to Banking Giant Options Gains[1] |
#2 – Bridgepoint Education (BPI)
| Bridgepoint Education, Inc. (NYSE: BPI[3]) is still a relatively new company with only about 15 months as a public company. Amazingly, even after losing half of its value the shares are still higher than when it went public. It has Ashford University and offers associate’s, bachelor’s, master’s and doctoral programs in the disciplines of business, education, psychology, social sciences and health sciences. This is also one that passed the initial tests. BPI closed today at $13.08 per share. It’s 52-week trading range is $12.75 to $27.50.
This is reaching a bit because of fewer strike prices to choose from, but the BPI Sept 17.50 Calls at 35 cents should offer significant upside if Ashford and Bridgepoint are left out of the meat grinder in Washington D.C. |
 The Secret to Banking Giant Options Gains[1] |
#3 – DeVry (DV)
| DeVry, Inc. (NYSE: DV[4]) fell when others rallied despite it being a potential survivor of the Department of Education scrutiny. The risk here is that its higher education and graduate studies would see a real hit. DV got its start as a technical education company in the 1930s but has moved up into higher education in technology, science, business, the arts and management. DeVry may be one educator you assume is safe, but it might not be entirely safe under the proposed guidelines.
The stock closed today at $37.98, and the 52-week range is $37.63 to $74.36. The stock price is still effectively cut in half, and it has not seen as much of a bounce as the other education stocks. That is why we are taking a higher strike and a lower premium — that way you aren’t as fast to see a premium compression. The DV Sept 45 Calls at 26 cents are the options that have a low premium which could actually still be winners as shares were above $50 as recently as August 6. |
 The Secret to Banking Giant Options Gains[1] |
#4 – ITT Educational Services (ESI)
| ITT Educational Services Inc. (NYSE: ESI[5]) has a history of technical training since 1969. There are 105 ITT Technical Institutes in 37 states with a focus in Information Technology, Drafting and Design, Electronics Technology, Business, Criminal Justice and Health Sciences that blend traditional academic content with applied learning concepts. ESI is far from immune, but higher default rates in the sector might in this instance be tied to the jobs situation more than being the fault of over-promising and not being able to teach workers skills. Associate and technical degrees here may be a necessity in the new normal more than ever.
With shares around $52, the 52-week range is $51.08 to $121.98. Despite a large loss on Monday, ESI closed up on a weak market on Thursday as some are considering that it will survive even in a more tightly regulated market. ESI started out August above $80 per share and was almost $70 eight days ago, so looking for exposure to a possible upside move should not require that you pay much premium. The ESI Sept 65 Calls can be purchased for 37 cents and could be worth exponentially more on just the hint of any positive developments. |
 The Secret to Banking Giant Options Gains[1] |
#5 – Strayer Education (STRA)
| Strayer Education Inc. (NASDAQ: STRA[6]) could be vulnerable due to many factors aside from it “falling outside guidelines.” Some short sellers may have targeted it extra hard for the simple reason that having a former $200+ share price implies that it has that much more room to crash. Strayer’s CEO Robert Silberman came out on Monday in a CNBC interview strongly defending the company disputing the government data because of discrepancies and because some of the data these educators need from the Department of Education is not being made available to them. Crying wolf doesn’t always work, but STRA stock could have a major launch if the pressure lightens up on them.
The out-of-the-money pick here are the STRA Sept 210 Calls at 80 cents. While there is slim chance of a rapid return, this was still a $240 stock at the beginning of August, and the $163.25 price as of Friday’s close compares to a 52-week range of $155.50 to $262.44. |
 The Secret to Banking Giant Options Gains[1] |
- The Secret to Banking Giant Options Gains: https://investorplace.com/order/?sid=OT3244
- APOL: http://studio-5.financialcontent.com/investplace/quote?Symbol=apol
- BPI: http://studio-5.financialcontent.com/investplace/quote?Symbol=bpi
- DV: http://studio-5.financialcontent.com/investplace/quote?Symbol=dv
- ESI: http://studio-5.financialcontent.com/investplace/quote?Symbol=esi
- STRA: http://studio-5.financialcontent.com/investplace/quote?Symbol=stra
- Get your FREE copy here: https://investorplace.com/order/?sid=OT3244
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