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Why Are Options Piling Into Huron Consulting?

Huron Consulting plummeted 69 percent in a single day this week after a high-profile accounting scandal, but traders apparently believe that the stock has hit bottom.

HURN stock ended Friday's regular session at $44.35 but, following news of the scandal after the market closed, fell as low as $11.30 before closing Monday at $13.69. Today (Thursday) the health care consultancy's shares have inched back into positive territory, up 1 percent to $14.73.

CNBC/OptionMonster Trading School:

Some option traders appear to believe that the stock will bounce further by the end of the year. Activity was focused on the December 15 strike, where more than 2,300 calls changed hands against open interest of just 37 contracts. Most of the calls were bought for $3.50 to $3.70, according to OptionMonster's Heat Seeker tracking system.

The calls purchased today would turn a profit only if Huron's stock is up well over 25 percent from current levels by the time the options expire in mid-December. Calls at all strikes outnumbered puts by more than 7 to 1, suggesting an overall bullish sentiment.

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Mike Yamamoto is an analyst and writer for OptionMonster.

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