Bulls see more gas in Radian's tank

optionMONSTER

Despite its huge move, the bulls are betting that Radian still has room to run.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 6,900 July 12 calls, most of which priced for $0.55 and 40.59. Volume was more than twice open interest at the strike.

Long calls lock in the price where shares can be purchased, providing investors with cheap upside exposure. The contracts can be used to make sure they don't miss a rally or to generate leverage. (See our Education section for more on the benefits of using options instead of common equity.)

Traders also bought July 22 calls in related company Assured Guaranty earlier in the week. Those contracts almost doubled by today as AGO climbed.

RDN is up 3.34 percent to $11.76 in early afternoon trading. It's been pulling back in the last six weeks but is now attempting to find support at its 100-day moving average. That could make some momentum traders think that it's worth getting long.

Gains in the stock have been fueled by better sentiment toward mortgages and by heavy short interest, which has forced bears to buy the stock.

Total option volume in RDN is more than twice the daily average so far today, according to the Heat Seeker. Calls outnumber puts by a bullish 6-to-1 ratio.

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