NLY – Annaly Capital Management, Inc. – It looks like one options strategist is bracing for bearish movement in the price of the mortgage REIT’s shares through October expiration. Annaly’s shares slipped 0.25% lower to $17.47 by 11:40 am ET. The trader appears to have purchased 7,500 puts at the October $16 strike for an average premium of $0.38 each, spread against the sale of 7,500 puts at the lower October $15 strike for an average premium of $0.18 apiece. Net premium paid to establish the put spread amounts to $0.20 per contract. Thus, the investor responsible for the transaction is prepared to profit should Annaly’s shares decline 9.55% to trade below the effective breakeven price of $15.80 by expiration day. Maximum potential profits of $0.80 per contract are available to the put spreader as long as NLY’s shares plummet 14.1% to $15.00 ahead of October expiration.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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