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Tuesday, June 23, 2009 1:48:04 PM
Published: Tuesday, 23 Jun 2009 | 12:38 PM ET Text Size By: David Russell
writer, OptionMonster
Options action turned aggressively bullish on Ambac Financial Group today as traders snapped up calls in the heavily shorted bond insurer.
Call volume spiked to 27 times the average amount over the last 20 sessions. Almost all the buying focused on the January 2.50 calls, which traded 20,146 times for $0.15 to $0.30 against open interest of 17,999 contracts. Most of the activity occurred during a 10-minute period, suggesting purchases by a single large investor.
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Ambac [ABK 1.10 0.08 (+7.84%) ], which is up almost 5 percent to more than $1 in midday trading, has fluctuated between $0.35 and $1.75 over the last six months. It would have to rally 164 percent for the calls purchased today to turn a profit on expiration.
The stock was one of the first to collapse in the mortgage crisis and still had a substantial short interest representing 15 percent of the float as of May 26. Small gains in the share price could trigger more buying as shorts rush to cover, creating a classic "squeeze" higher despite a lack of positive developments for the company.
Today's buyer may have purchased the calls as a hedge against such a short position. The distant month provides more delta, which means the options will appreciate more quickly than shorter-dated calls if the stock rallies. The longer expiration also reduces the likelihood of time decay eroding the position's value.
Calls in Ambac today outnumbered puts 1,635 to 1, reflecting the lopsided bullish trade.
Recent AMBC News
- Form 8-K - Current report • Edgar (US Regulatory) • 08/05/2024 09:16:05 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/05/2024 08:24:10 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/05/2024 08:13:40 PM
- Ambac Reports Second Quarter 2024 Results • Business Wire • 08/05/2024 08:10:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/02/2024 09:25:20 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/02/2024 09:12:45 PM
- Form PREM14A - Preliminary proxy statements relating to merger or acquisition • Edgar (US Regulatory) • 08/02/2024 09:00:40 PM
- Ambac Completes Acquisition of Beat Capital Partners • Business Wire • 08/02/2024 12:30:00 PM
- Form S-3ASR - Automatic shelf registration statement of securities of well-known seasoned issuers • Edgar (US Regulatory) • 08/01/2024 09:03:28 PM
- Ambac to Release Second Quarter 2024 Results on August 5, 2024 • Business Wire • 07/22/2024 12:30:00 PM
- Kuehn Law Encourages GRDI, ALE, HTLF, and AMBC Investors to Contact Law Firm • PR Newswire (US) • 07/17/2024 01:37:00 PM
- Richard Edsall Joins Tara Hill as Senior Vice President • Business Wire • 07/11/2024 12:30:00 PM
- Ambac’s Cirrata Group Launches Tara Hill, an E&S Management and Professional Liability Program Administrator Led by Industry Veteran Peter McKeegan • Business Wire • 06/24/2024 12:30:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/13/2024 01:52:05 PM
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