APOL – Apollo Group, Inc. – Shares of the provider of educational programs and services rallied as much as 2.8% today to reach an intraday high of $42.65. Apollo’s shares seem to be continuing on the road to recovery this week, but one options investor populating the stock constructed a bearish stance in case the firm encounters bumps along the way. APOL’s shares, which are currently trading at $42.50, are down 36.3% since April 22, 2010, when the stock was at $66.69. The education provider recently touched down at a new 52-week low of $38.39 on August 13, 2010. The options trader prepared for the possibility that APOL’s shares could reverse direction by purchasing a put tree, buying 7,000 puts at the October $40 strike for premium of $2.69 each, selling the same number of puts at the October $35 strike at a premium of $1.20 apiece, and finally shedding another 7,000 puts at the lower October $30 strike for a premium of $0.48 a-pop. The net cost of the transaction is reduced to $1.01 per contract. Thus, the put player is poised to profit should Apollo’s shares plunge 8.25% lower to breach the effective breakeven point to the downside at $38.99 by October expiration. Maximum potential profits of $3.99 per contract are available to the trader should APOL shares tumble 17.65% from the current price of $42.50 to settle at a new 52-week low of $35.00. The uncovered short position at the October $30 strike indicates the investor is willing to have 700,000 shares of the underlying stock put to him at $30.00 each in the event Apollo’s shares collapse below $30.00 and the puts land in-the-money by expiration day. We note that the investor could be utilizing the put tree to protect the value of a large position in APOL shares rather than employing the strategy as an outright bearish bet that shares are set to decline in the next couple of months.