DV – DeVry, Inc. – Shares of the owner and operator of for-profit colleges and universities fell as much as 10.5% in the first half of the trading session to an intraday and new 52-week low of $38.22 on heightened concerns U.S. regulators will toughen regulations on student loans. The actions of one options trader populating DV today suggests the firm’s shares may head lower in the next several months. It appears the investor initiated a bearish risk reversal, selling out-of-the-money call options to finance the purchase of puts. The pessimistic player shed 2,663 calls at the November $55 strike for an average premium of $0.30 each in order to purchase the same number of November $35 strike put options at a premium of $2.40 apiece. Net premium paid to establish the spread amounts to $2.10 per contract. The investor responsible for the transaction is poised to profit should DeVry’s shares plummet 13.9% from today’s low of $38.22 to slip beneath the effective breakeven price of $32.90 by expiration day in November. More than 8,100 option contracts changed hands on DeVry, Inc. by 1:00 pm ET.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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