Ambac Shares Popped: What You Need to Know

What: Shares of Ambac Financial (NYSE: ABK) were up more than 10% in intraday trading as investors digested the plan of rehabilitation from the Wisconsin insurance commissioner.

So What: Earlier this year, the Wisconsin Office of the Commissioner of Insurance (OCI) set aside certain liabilities of Ambac's Wisconsin-based Ambac Assurance because it became increasingly clear that the company was going to struggle to pay its policyholders. The plan from the OCI is one more step toward Ambac sorting out its messy situation.

Now What: It has been a heady week for Ambac, and shares have risen close to 50% since the beginning of last week. Ambac's situation is still pretty dire, though, and regulators' primary concern is making sure that policy-holders are made whole, not that Ambac itself will avoid bankruptcy protection or survive at all. At this point, shares of Ambac are a gamble -- and likely a bad one -- so prudent investors are best off steering clear in favor of less ulcer-inducing fare.