Huron Recovering from Earnings Restatement, Accounting Scandal

Sep.16.09 | About: Huron Consulting (HURN)

by David Russell

Huron Consulting (NASDAQ:HURN) has rallied 69 percent in the last month, prompting one trader to take profits while staying long the stock.

HURN Chart

In one large trade, 9,500 December 17.50 calls were apparently sold for $6.80, according to optionMONSTER's tracking programs. Seconds later, an equal number of December 22.50 calls were purchased for $3.90.

Volume was below open interest in the lower strike calls but not the higher, which indicates an investor sold an existing position in the former to buy the latter. The strategy let the trader recover $2.90 of premium while maintaining long exposure.

HURN rose 2.44 percent to $22.25 Tuesday. The business consultant, founded by members of the former Arthur Andersen firm, is recovering from an Aug. 3 selloff that followed an earnings restatement and an accounting scandal that led to the resignation of senior management.

The stock gapped higher on Aug. 18 on a strong earnings report, but is still trading for less than half its price at the end of June.

The call rolling in HURN Tuesday pushed options volume in the name to more than four times average. Calls outnumbered puts by 25 to 1.

(Chart courtesy of tradeMONSTER)