Those investors now have the right to buy Assured for $14 and have agreed to sell it for $17 if it closes above that level six weeks from now. They paid $0.65 to control this call spread and will collect $3 if it goes to $17 — a profit of about 362 percent from a 30 percent move in the stock, which shows the kind of leverage you get from trading options.
Assured shares fell 2.03 percent to $13.01 yesterday. The company provides credit-protection products to financial markets in the U.S., Europe, and Australia.
Almost 20,000 contracts traded in the name yesterday, compared with 4,700 in a normal session. Calls outnumbered puts by 6 to 1, reflecting the bullish sentiment.
—By CNBC Contributor Pete NajarianAdditional News: Why Pete Najarian Is Buying This Coal Stock
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com. Najarian has no positions in AGO.