How large call spread is playing MBIA

Chris McKhann (chris.mckhann@optionmonster.com)

A complex call spread led yesterday's option activity in financial insurer MBIA.

optionMONSTER systems show that a trader bought 9,500 June 13 calls for $0.51 and sold the same number of August 17 calls for $0.43. The volume was more than the previous open interest at each strike, indicating new activity.

This is a bullish diagonal spread, using the sale of the longer-term, higher-strike calls to offset some of the cost of the June 13 long calls . (See our Education section)

MBI fell 4.37 percent yesterday to finish at $9.85, in the middle of its range for the last year. The stock hit its 52-week low below $7 in mid-November and its high above $13 at the start of March.

The company has tentatively scheduled its first-quarter earnings report for May 8. optionMONSTER systems show that 42,500 MBI options changed hands yesterday, nearly triple its daily average for the last month.


More From optionMONSTER