Large bullish spread targeting MBIA

optionMONSTER

A trader is opening a highly bullish position in MBIA as shares of the financial-insurance company rebound today.

optionMONSTER Heat Seeker system shows that a trader bought 10,000 August 13 calls for the ask price of $1.17 and sold the same number of the August 16 calls for their bid price of $0.54. The volume at each strike was well above the previous open interest, indicating new activity.

This bullish call spread cost $0.63 to open, which is the maximum amount at risk if MBI remains below $13. The maximum gain of $2.37 would be realized if shares are above $16 at that time. (See our Education section)

MBI is up 1.81 percent to $10.66 in early afternoon trading. Shares hit a 52-week high of $13.02 a month ago and were last above $16 in September 2008.

More than 27,600 MBI options trade with calls outpacing puts by more than 10 to 1. 

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