You gotta read the optionMONSTER article under the headlines in yahoo finance for MBIA. Amazing. Some big, big player is bullish.
Large volumes of both calls and puts have just been recorded- 15,095 calls at the March 14 strike, 13,302 puts at the March 12 strike.
And the stock has started to move up now.
Bollinger Bands are not predictors. They are indicators. Today, the upper is showing as 13.78. That means the price still has room to move before it shows as overbought, as does the RSI, which is 74.66 today. Anything above 70 indicates overbought.
Having said that, technicial analysis is just another tool in the toolbox. Also, technicial analysis has no chance against news. And we know that news is coming- earnings after the market closes on Monday. To me, what the technicial analysis is showing is that the market is anticipating some sort of "game changing" news. If the market gets a ho-hum report it will sell off, since the technicial analysis is showing that the stock is overbought. We don't have long to wait!
I think a lot of people feel the same as you- they have no idea about the company or its direction. (Including me).
This was brought sharply into focus last February 13th, when the news item about MBIA corp. paying the $325 million to commute the Normura Securities credit default swaps was made public. All the time this was going on, Barrons, WallStreet, Mike Palmer et al were fretting about Puerto Rico Bonds.
Last week, OptionMONSTER thinks it has identified a MBIA Bull, in that they suspect a large trader sold-to-open 7,500 Feb 13 calls @0.17, and used this cash to get a discount on 7,500 March 13 calls, which were offered @ 0.69. So the trader paid a net of 0.52 for the March calls. Well, we shall see.
Finally, we just MAY get some real information on Tuesday, March 4th.
Also, Fitch has joined the club and downgraded PR municipal paper to "junk" status.
Apparently, the junk status will "force $13B of PR's $70B of muni debt out of Barclay's municipal bond index, and passive ETF's will likely be forced sellers of PR paper, though most mutual funds can continue to hold."
They go on to list MBI, AGO and AMBC as "monolines". What, exactly, is a "monoline"?
There is also a Bloomberg article that has appeared- a lot of the PR bonds are being removed from a Barclay's Bank Index, now that they are "junk" status. But some are still considered "Investment Grade". These bonds are the ones that companies like MBI and AGO have insured, at least according to the article. So I'm thinking this rally has more to do with relief than anything else.
I think it is very good news!
Yesterday the Island made it onto the noon-hour "squawk box". Apparently, the Island's debt is in the same league as States such as New York and California. Huge!
It was said that "they" (the governor's office?) have rejected the $2 billion rescue package offered @ 10%. If this is true, then, according to these guys on the T.V., the Island may have to re-structure all of its debt.
If it must re-structure, does that mean that all the bonds have to be re-insured? If so, that may explain the rally we are in.
Or maybe this is a relief rally, since the PR situation is now coming into focus, and a debt re-structure would remove most, if not all of the risk associated with MBIA's current exposure to Pureto Rico debt?
Here is the gist of it:
•A couple of news items out of Puerto Rico have BTIG's Mark Palmer suggesting a little pressure could come off the stocks of MBIA (MBI), Assured Guaranty (AGO), and Ambac (AMBC).
•First was last night's announcement Puerto Rico is considering offering $2B in debt in the coming weeks, suggesting the Commonwealth has come to terms with paying as much as a 10% interest rate - unsustainable in the long-term, of course, but Palmer says to consider the $2B "bridge financing" which takes default off the table for two years
•This morning, Governor Alejandro Padilla announced he will introduce a balanced budget for the 2014-15 fiscal year in the coming weeks, ahead of a previous goal of 2016. The accelerated schedule, says Palmer, could address the concerns of ratings agencies itchy to downgrade Puerto Rico to junk, and it might allow something lower than a 10% coupon on the possible debt offering.
The Feb 22nd calls are already loaded @ the $11 and $12 strikes. About 1200 contracts so far. AGO is seeing some action @ the $22 and $23 strikes for the same expiry, but only a couple of hundred.
That's what I thought- since the move was limited to the AM.
Over 3,000 puts have been traded today @ the February $11 strike, with the open interest showing at 34,073 right now.
But where, then, is the $796 million? The money is worth $4+/share!
I know and understand that the money has been booked as "a recievable"- that's why the book value of the company is over $16/share- it includes this $796 million.
But the market value of the shares still do not include this money.
What am I missing here- show me the money!
Some here are talking about a credit upgrade- I myself cling to the hope that the Rescap Hearing is winding up and MBIA Corp. will be awarded its fair share- $796 million.