By David Russell, reporter at OptionMonster
NEW YORK -- The momentum bulls made some fast money in Assured Guaranty (AGO) on Wednesday.
OptionMonster's tracking programs detected unusual call volume in the beaten-down financial, which trades for barely half its book value. Some 3,100 February 18 calls were bought early for 11 cents and 12 cents in volume that was well above the strike's previous open interest of just 1,113 contracts, indicating new activity.
Those calls lock in the price where investors can buy stock, so they can generate significant leverage in the event of a rally. And that's exactly what happened Wednesday.AGO was at $16.45 when the trades hit, and it ended the session up 5.47% to $16.98. The calls more than doubled in the process, fetching 27 cents by late in the day. Overall option volume was six times greater than average, with calls accounting for a bullish 84% of the total. Russell has no positions in AGO