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ITT Sees Upside Options Activity From Rising Unemployment

ITT Educational Services drew some upside options activity yesterday as for-profit schools find themselves with a rush of applicants resulting from rising unemployment.

ITT Educational Services, which operates post-secondary technology-oriented schools, saw action focused on the July 105 and 110 calls. About 4,500 and 3,900 calls traded at those strikes respectively, well over the open interest.

The industry leader's stock ended the regular session up 1 percent to $92.89 but fell slightly to $92.70 in after-hours trading. The shares are smack-dab in the middle of their trading range and have found support below consistently at $90 in recent months.

The company is trading at the cheapest valuation, and the call buyers may be expecting the range to hold and move to the upper end. ITT Educational Services' enrollment increased 37 percent in the first quarter, and management plans to open six to eight new locations this year.

Disclosure:

Najarian owns a long call spread in ESI.

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Options Trading School:

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  • ITT Educational Services Competes With:

    Apollo Group

    Corinthian Colleges

    DeVry

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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