Options Trading News

April 10, 2013  Wed 11:09 AM CT

A trader is opening a highly bullish position in MBIA as shares of the financial-insurance company rebound today.

optionMONSTER Heat Seeker system shows that a trader bought 10,000 August 13 calls for the ask price of $1.17 and sold the same number of the August 16 calls for their bid price of $0.54. The volume at each strike was well above the previous open interest, indicating new activity.

This bullish call spread cost $0.63 to open, which is the maximum amount at risk if MBI remains below $13. The maximum gain of $2.37 would be realized if shares are above $16 at that time. (See our Education section)

MBI is up 1.81 percent to $10.66 in early afternoon trading. Shares hit a 52-week high of $13.02 a month ago and were last above $16 in September 2008.

More than 27,600 MBI options trade with calls outpacing puts by more than 10 to 1. 
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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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