Long-term bullish trade on Chubb

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Chubb has been trending higher all year, and one investor is looking for the gains to accelerate.

optionMONSTER's Heat Seeker tracking system detected the purchase of 4,057 January 2013 75 calls for $2 against open interest of 3,665. No large blocks of shares traded at the same time, so it appears that this was a straightforward bullish bet.

CB CB is up 0.85 percent to $59.61 in morning trading and has risen 21 percent in the last year. The property-and-casualty insurer reported better-than-expected earnings on Oct. 21 and raised its full-year guidance. The company, along with most others in the sector, has generally benefited from rising asset prices and lower claims relative to premiums.

The stock has been consolidating between $56 and $60 since early September and last month made a slightly higher low than in early October. It also seems to have found support at its 50-day moving average (black line on chart), which some may consider evidence it remains in a bullish trend.

CB would have to climb at least 29 percent over the next 25 months for the contracts purchased today to turn a profit.

The trade pushed total option volume in the name to 11 times greater than average, with calls outnumbering puts by 26 to 1.

(Chart courtesy of tradeMONSTER)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: CB

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