Options Trading News

February 26, 2013  Tue 9:42 AM CT

Radian is at its highest level in two years, and one trader apparently believes that there's no going back for the mortgage insurer's stock.

optionMONSTER systems show that more than 15,000 RDN options have traded so far today, compared to a daily average of 3,400. Most of the action is in the January 2015 5 puts.

A trader sold 5,000 of those contracts for $1.10 and another 5,000 for $1.05 seconds later. The open interest in the strike was just 63 before the session began, so these are new positions.

The put selling is a bet that RDN will hold up over the long term. The trader risks having to buy shares if RDN falls below the $5 strike price. (See our Education section)

RDN is up 1.47 percent to $8.27 this morning. It is below yesterday's intraday high but on pace for its best close since January 2011. Shares hit a low of $2 in late May and were below that $5 level in mid-December.

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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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