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Assured Guaranty gets bullish bet

Chris McKhann (chris.mckhann@optionmonster.com)

A trader is apparently raising the stakes in a wager that is looking for Assured Guaranty to pop in the next six weeks.

optionMONSTER's Heat Seeker system detected the sale of 2,000 July 24 calls for the bid price of $1.50 against previous open interest of 2,693 contracts this morning. Seconds later, the trader bought 6,000 July 26 calls for the ask price of $0.53 in volume above open interest in that strike.

This could be a new backspread , but the trader is more likely selling the in-the-money July 24 calls and using all the proceeds to purchase 3 times as many out-of-the-money calls at a strike that is $2 higher. The net cost of this roll is just $0.09, and the new long calls are looking for the stock to rise above $26 by expiration in mid-July. (See our Education section)

AGO is up 0.28 percent to $25.15 today. The bond-insurance company posted a high of $26.76 in mid-March but was as low as $24.22 on Tuesday.

Total option volume in the name tops 8,100 contracts, nearly 7 times its daily average for the last month. Only 13 puts have changed hands so far, a reflection of the session's bullish sentiment.

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