Option Investor

On The "Watch" List - CECO

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Shares of Career Education (NASDAQ:CECO) dropped sharply
today, last down $1.73 at $37.28 on heavy volume as stocks
in the Education & Training group followed the broader market
sectors into negative territory. Our warning on Wednesday was
timely, providing conservative players an opportunity to exit the
position for minimal cost. With a $65 (per contract) credit in
the spread, the (overall) loss was only $75 -$150, depending on
when the play was closed during the morning session. Traders
who favor a more aggressive approach might consider a "short
to cover" order on any move below the sold strike at $35, thus
allowing for a near-term rebound in the issue rather than simply
exiting the play at a loss. With a break-even basis of $34.35,
there is still some margin for downside activity and the minor
technical support near that price may be enough to keep the
spread in profitable territory until a new uptrend emerges.

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