[Closing Spread on Mbia, Inc. (MBI)]
Dear Member:
There is now substantial profit in my MBI spread and I expect this bond insurer will drop if the rating is reduced as it well may be. I am going to place an order to close the spread by simultaneously buying to close the Feb 10 puts (MBINB) and selling to close the Feb 7.5 puts (MBINU) at a net debit (before commission) of $0.30. Since I entered for a $0.70 credit, this would result in a 40 cent gain and a 22% return on risk in just about 3 weeks.
DISCLOSURE: At the time of publication, I hold the referenced spread.
Sincerely,
Bill Kraft
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