Assured Guaranty spent most of June churning below $15, but activity turned bullish yesterday (Wednesday) amid speculation of a legal settlement.
The mortgage insurer fought hard against a downdraft in the market yesterday, and buyers stepped in to the August 14 calls. They initially snapped up blocks for $1.45 to $1.50.
The stock drifted down along with the rest of the market late in the day, but the call activity showed up again on OptionMonster's Heat Seeker system, this time for $1.35. By the end of the session, volume in the August 14 calls stood at 8,156 — more than 2.5 times the average daily call volume at all strikes combined.
The stock ended Wednesday up 0.15 percent to $13.27.
The bullishness is nothing new for Assured Guaranty, which has seen about twice as many calls than puts trade on average over the last month. Yesterday the catalyst was a note from Piper Jaffray saying that the company will reach a settlement in a dispute with Deutsche Bank.
Financials have certainly been a killing zone of late, so we're not feeling any need to rush in. But it's on our watch list.
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Najarian does not hold significant shares in the company mentioned in this story.