Traders Turn Bearish on Annaly Capital
By: 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.
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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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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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