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Bulls bet nothing will stop Ambac

David Russell (david.russell@optionmonster.com)

Ambac Financial has been going straight up, and traders can't seem to stop buying.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 3,900 April 40 calls, most of which priced for $0.45. There was no open interest at the strike before the session began, so new money was put to work.

These long calls lock in the price where a stock can be purchased, letting investors cheaply control a move higher. They can also generate significant leverage if the shares continue to rally but will expire worthless if shares remain below $40 through mid-April. (See our Education section)

AMBC rose 5.24 percent to $34.56 on Friday and is up 43 percent in the last month. The financial guarantor announces quarterly results this afternoon, so last week's call buyer stands to benefit from a strong report.

Total option volume was 9 times greater than average in the session. The Heat Seeker also detected buying in the May 22.50 calls last November , which have more than tripled in value.

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