MBIA has been grinding higher, and one bullish trader is sticking around.
optionMONSTER’s Heat Seeker monitoring system detected the purchase of 5,000 September 12 calls for $0.73 and the sale of an equal number of September 15 calls for $0.22. Additionally, a block of 7,000 August 12 calls was sold at the same time for $0.38.
Volume was below open interest in the August contracts but not September, which suggests that an existing long position was closed and rolled forward. The investor reduced the number of contracts and replaced simple calls with a vertical spread to reduce the cost.
He or she collected a credit of about $11,000 and now stands to make an additional $1.5 million if the financial guarantor closes at or above $15 on September expiration. (See our Educationsection for more on vertical spreads.)
— Option Monster