Options Trading News

May 3, 2013  Fri 11:00 AM CT

MBIA is rebounding from multi-month lows today, but one large trader is selling calls in the mortgage-insurance company.

A trader sold 12,600 June 18 calls in one print for the bid price of $0.13, optionMONSTER systems show. This is clearly a new trade, as open interest in the strike was just 1,971 contracts before the session began.

These deep-out-of-the-money calls may have been sold naked in a trade that would have an initial bearish bias but would profit with MBI anywhere below $18.13 at expiration. Alternatively, they could have been tied to long shares in a covered call position, which would be bullish up to the strike price, but most traders do not use calls that far out of the money for this purpose. (See our Education section)

MBI is up 9.8 percent to $9.97 in early afternoon trading, a day after reaching its lowest levels since Feb. 5. Shares were above $13 in early March.

More than 36,000 MBI options have changed hands so far today, already about twice its full-session average in the last month. 
Share this article with your friends

Related Stories


Big put sale bets on floor in MBIA

September 10, 2015

The bond-insurance firm gapped down from on June 29 with fears that it had heavy exposure in Puerto Rico's debt crisis, but shares have been working their way higher since.


Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »