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Traders Turn Bearish on Annaly Capital

Annaly Capital Management reported earnings last week, and the bears have been running the show ever since.

OptionMonster's real-time systemsdetected heavy activity in Annaly puts yesterday, mostly in the October 15 strike. More than 24,000 of those puts changed hands against open interest of 15,037 contracts.

The trades started early with a small amount of selling for $0.18. The buyers quickly stepped in and drove premiums to $0.20 and then $0.25 in size. Not much later they leaped to $0.38, $0.39, and $0.40, even though the share price barely moved.

Annaly , which fell 1.95 percent to $17.08 in the session, has been moving sideways since September. In the last few months the real-estate invesment trust has been showing signs of fatigue, and now its shares are below their 200-day moving average. It's also been making lower lows and lower highs, which is never a good thing for a stock.

The shares must fall at least 14 percent by expiration for the contracts bought yesterday to turn a profit.

Put volume was huge in the name yesterday, with more than 84,600 changing hands against 9,180 calls. Overall option volume was 7 times greater than average.

The bearish activity was a continuation of a trading theme we saw last week. Last Friday puts accounted for 94 percent of total activity in a heavy session.

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Annaly Competes With:

Capstead Mortgage

Impac Mortgage

Redwood Trust

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Options Trading School:

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Disclosure:

Najarian owns NLY puts.

Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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Disclaimer

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CMO
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IMH
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NLY
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RWT
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