Calls are active as Chimera pops


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Chimera Investment spiked higher Friday, prompting a slew of call activity.

Most of the trades resulted from investors selling about 8,937 December 5 contracts for $0.10 against open interest of just 67. There was also buying of the September 5 calls for $0.10 and $0.15, plus the June 5 calls for $0.05, although volume in both was below open interest.

CIM Chart Overall options volume in finance company was 23 times greater than average.

CIM gapped higher on the open and closed up 2.99 percent to $4.13. The company, organized as a real-estate investment trust, makes money by owning mortgage-backed securities. It raised its dividend in December, resulting in a forward yield of 17 percent.

The shares have been trapped between $3.50 and $4.25 since August. Friday's gains came despite a lack of apparent news, though some buyers may be targeting the stock amid improvement in the housing and home-lending sectors. Builders and mortgage-insurance companies have been rallying this month.

While the call selling may initially appear bearish, it could also result from an investor writing CIM options to maintain a short position in volatility, which has fallen to 40 percent on the stock from 84 percent in November.

CIM last reported earnings on Feb. 8 and hasn't yet indicated when the next release will be issued.

(Chart courtesy of tradeMONSTER)

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This article appears in: Investing , Options

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