Cramer: The Next Short-Killer Is MGIC

This column was originally published on RealMoney on April 17 at 11:33 a.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

We would always be worried about it being too easy when I was at my hedge fund. Coke? Was that so hard? Goldman Sachs? What were we thinking selling that at $195? Did anyone really think that AIG wouldn't come back when the insider selling let up, which it seems to for a day or two?

This market is a short-killer because it is obvious. Once some factors were priced in -- inflation and the subprime chaos -- anything good would trigger a monster rally.

Let's take the case of Moody's(MCO Quote) and McGraw-Hill(MHP Quote). How could people not have covered on these the moment that Fremont(FMT Quote) said things were OK? Moody's is levered to leverage buyout bonds, not residential mortgage bonds, although the latter will live again as repackaged bonds with an equity kicker.

I'm glad I told you about Moody's and McGraw-Hill Monday. Hope you did them. I have the next one: MGIC(MTG Quote).

Let me reiterate that MGIC, which didn't go down on that last quarter -- one that was just plain toxic -- will now explode to the upside for the same reason that the ancillary plays like Moody's and McGraw-Hill exploded.

My level of conviction? I would buy the April 60 calls. One call, and you have 5 points to the upside.

Who wouldn't take that risk reward?

Random musings: OK, let's get over it. It wasn't a meltdown. It was just a series of corrupt companies writing bad loans and thinking they could get away with it. If it were a "meltdown," wouldn't Countrywide(CFC Quote) have taken out its low? ... Some fun stuff on video with James Altucher about who taught me to buy down. Never talked about that before. ... There's almost no open interest in the Sears(SHLD Quote) April 200s. That's a good sign. It means there is no cap on the stock, because people won't get long as it gets higher. I bet the stock doesn't stop here.