This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Oriental Education Called Into The Principal's Office

What's the best play with New Oriental Education? There may be an attractive short-term trade coming up Thursday. Near the end of the day, if still trading lower, sell out of the money puts.

Fear of continued losses tends to push portfolio insurance prices up dramatically, while at the same time the stock should bottom. Short interest is relatively small (about 5%), removing the largest catalyst for a move higher.

It's not one to get greedy with; hold on for a few days and as the implied volatility falls (hopefully with a dead-cat bounce), exit out with a quick hit and run for profits. Otherwise, for longer-term investors, the best play is to wait until the SEC investigation is finalized for an entry. (Read my Bridgepoint Gets Detention and Green Mountain's Down the Cliff article.)

BPI Chart BPI data by YCharts

The other education stocks will likely bounce back quickly as investors formulate the issue is isolated to New Oriental Education. I entered into a long position with Bridgepoint Education by selling put options.

At the time of publication the author was long BPI.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
EDU $22.40 0.00%
AAPL $123.38 0.00%
FB $95.29 0.00%
GOOG $628.00 0.00%
TSLA $264.82 0.00%

Markets

Chart of I:DJI
DOW 17,630.27 +189.68 1.09%
S&P 500 2,093.25 +25.61 1.24%
NASDAQ 5,089.2060 +49.43 0.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs