MBIA Options Alert! (MBI, ABK)

Posted in Options 
November 9th, 2009

MBIA Inc. (NYSE: MBI) is trading 9,900 calls and 1,804 puts ahead of earnings tonight with ISE Sentiment indicating that the offer side buying in the November $5 calls is mostly new opening buyers, as 7,000 trade against OI of 9,700.  Implied volatility is also jumping 8% to 132 % on the day.  Shares of the insurance and investment company trade 2X forward earnings estimates, 1X cash, and has a 35.5% short float, so we could see a major squeeze on positive developments.  MBIA could report a similar blowout quarter to Ambac on credit derivative gains.  Shares of Ambac gained 46% on earnings, and MBIA is likely having more success writing new business and also will see similar accounting gains.  (2:35 PM EST)

Joe Kunkle, OptionsHawk.com

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