Learn the trade here. Make it on tradeMONSTER

Options Trading News

June 5, 2012  Tue 2:32 AM CT

AGO: SEE CHART GET CHAIN FIND STRATEGIES
Shares of Assured Guaranty continue to slide, but a large trade is looking for a bounce in the mortgage insurer.

AGO has been falling since hitting a 52-week high of $19.04 in mid-March, closing above its 10-day moving average only once since then. The stock dropped another 4.2 percent to finish yesterday at $11.26, its lowest close since Dec. 2.
 
More than 67,000 AGO options traded on the day, compared to a daily average of 3,707. The volume was dominated by a single call spread, optionMONSTER's Heat Seeker shows.

A trader bought 20,000 July 14 calls through the middle of the day in large institution-size blocks, mostly for $0.28. At corresponding times 40,000 July 18 calls were sold for $0.03. The volume at each strike was more than the previous open interest, indicating that this is a new call ratio spread.

The spread takes a maximum profit if AGO is just at or below $18 at expiration. The trader risks only $0.22 if shares remain below $14, but he or she would be effectively short shares above $18. (See our Education section)
Share this article with your friends


TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Free Webinar Series

The 100K Challenge

Education & Strategy

Anatomy of a butterfly

One of the many esoterically named option strategies is known as a "butterfly." But don't be fooled: Like other advanced...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER