OptionsHouse

Options Trading News

October 11, 2012  Thu 3:45 AM CT

MBI: SEE CHART GET CHAIN FIND STRATEGIES
MBIA drew long-term put buying yesterday for the second time in less than a week.

More than 73,000 MBI options traded, compared to a daily average of 3,800. Puts outpaced calls by more than 10 to 1, led by 57,000 that traded in the January 2014 5 strike against open interest of 15,173 contracts.

These puts were bought throughout the morning for $0.57 up to $0.63, with the biggest block of 30,000 going for the bid price of $0.60, according to optionMONSTER's Depth Charge tracking system. Last Thursday a trader bought 14,000 puts at the same strike.

MBI fell 2.46 percent yesterday to close at $10.29. The company, which backstops municipal and asset-backed debt, started the week above $11 and was up at $12 in mid-September.

The put buying appears to be a straightforward bet that the stock will drop sharply to levels last seen at the end of 2009, when it traded as low as $3.19. It is not likely a hedge on a long position because the puts are more than 50 percent out of the money. (See our Education section)
Share this article with your friends


Related Stories

MBI

Bears circling MBIA for second day

January 28, 2015

The loan guarantor has mostly reported strong earnings, but investors remain wary of potential exposure to bad mortgages.

OptionsHouse

Premium Services

Archived Webinar

Option Money Machine Winter Classic

Education & Strategy

The rolling technique

In the January 7th edition of Advantage Point, we initiated the purchase of a second week-out GOOGL 535 put at...

View more education articles »