Annaly trader buys time for a breakout

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One investor is waiting for a breakout in Annaly Capital Management as the stock challenges long-term resistance.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 15,000 January 17.50 calls for $0.79. A matching number of July 18 calls was sold at the same time for $0.21 against previous open interest.

NLY is up 0.08 percent to $18.15 in early afternoon trading and has been pushing against its current level since late 2009. The company is organized as a real-estate investment trust and generates a huge stream of income by borrowing in the short term and investing in higher-yielding securities that mature later.

That allows it to have a rich dividend yield of about 14 percent.

Today's option transaction apparently resulted from an investor rolling an existing position from one strike to the other, gaining an additional six months of long exposure at a cost of $0.58. However, considering the added intrinsic value from going deeper in the money, they only paid an additional $0.08. (See our Education section)

If NLY does break resistance, the trader will enjoy significant leverage even if the stock's advance is quite modest.

Overall option volume in the name is 5 times greater than average so far today, with calls accounting for a bullish 91 percent of the total.




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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: NLY

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