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Trade counts on big move in MBIA

Chris McKhann (chris.mckhann@optionmonster.com)

A long-term trade is apparently anticipating a sharp move up or down in financial-insurance firm MBIA.

More than 30,000 MBI options traded yesterday, about 3 times its daily average for the last month. Most of that volume was in one print in the January 2015 8 puts.

optionMONSTER systems show that 20,000 of the puts were purchased for the ask price of $1.48. The volume was 4 times the previous open interest, so it clearly a new position.

A short time later, the largest block of MBI stock traded as 520,000 shares were bought for $9.9792. The combination of stock and options creates a delta-neutral strategy that is looking for higher volatility rather than a specific direction in the shares. (See our Education section)

MBI fell 5.4 percent to $9.63 yesterday, its lowest close since the start of May. That was right before the stock jumped up above $16, but it has been trending lower since.

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