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Volatility play takes aim at XL Group

One investor apparently thinks that XL Group will get more interesting in 2012.

optionMONSTER' tracking systems detected the purchase of about 2,300 contracts each in the July 20 calls and the July 20 puts. The calls priced for $2.11 and the puts for $2.31, resulting in a total cost of $4.42. There was barely any open interest in either strike when the session began, so this is a new position.

Known as a straddle , the trade is designed to profit from greater volatility in the insurance stock. Implied volatility has been inching higher in the last week, and the investor may expect that trend to continue heading in the next earnings release, which will probably occur in early February. (See our Education section)

XL rose 1.06 percent to $19.93 yesterday, which has fluctuated between $18 and about $22 for the last six months.

Yesterday's trade pushed total option volume in XL to 16 times greater than average.

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

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

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