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October 4, 2012  Thu 12:07 PM CT

MBI: SEE CHART GET CHAIN FIND STRATEGIES
MBIA sits in the middle of its recent range, but a big option trader is making a long-term bearish bet on the financial stock.

MBI is up 2.91 percent to $10.80 this afternoon. Shares of the company, which backstops municipal and asset-backed debt, was down at $9 in early August but touched $12 three weeks ago.

An institutional trader bought 14,000 January 2014 5 puts for $0.57, according to optionMONSTER's Depth Charge tracking system. This is clearly a new position, as open interest in the strike was just 69 contracts at the start of the day.

The put buying isn't obviously tied to any trading in the stock today, and it seems unlikely that someone would be looking for a hedge with longest-term contracts that are 50 percent out of the money. So this appears to be a straightforward bearish bet that MBI will fall back to prices last seen in 2009. (See our Education section)
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Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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